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CommScope to buy Arris in $7.4 billion deal

Arris acquisition would add Ruckus’ enterprise Wi-Fi business to CommScope’s portfolio

Network infrastructure company CommScope agreed to acquire communications and video hardware and software company Arris, in a $7.4 billion transaction that greatly expands CommScope’s product portfolio and will bring enterprise Wi-Fi provider Ruckus Networks into its fold.

CommScope painted a picture of lofty expectations for the combined company as a major communications and network player that would “drive profitable growth in new markets, shape the future of wired and wireless communications, and … benefit from key industry trends, including network convergence, fiber and mobility everywhere, 5G, Internet of Things and rapidly changing network and technology architectures.”

On Twitter, CommScope called the acquisition a “bold step toward our vision for a connected future.”

The combined company would have combined revenues of about $11.3 billion and serve a broad swath of communications and network providers and enterprises and strengthen CommScope’s position in an increasingly video-centric network world. It combines Arris’ position as a major cable industry supplier of customer premise equipment, video and broadband infrastructure and cloud software with CommScope’s fiber and network infrastructure portfolio for wired and wireless networks. Arris also brings Ruckus Networks and ICX Switch, which serve the enterprise network space; Arris acquired those companies less than a year ago from Broadcom.

CommScope said in a release that it believes “trends such as network convergence, fiber and mobility everywhere, the advent of 5G and fixed wireless access, internet of things and rapidly changing network and technology architectures will provide compelling long-term opportunities for the combined company and its unique end-to-end communications infrastructure capabilities.”

“After a comprehensive evaluation of our business and the evolving industry we operate in, we are confident that combining with Arris is the best path forward for CommScope to grow and provide the greatest returns for shareholders,” said Eddie Edwards, president and CEO of CommScope, in a statement. “CommScope and Arris will bring together a unique set of complementary assets and capabilities that enable end-to-end wired and wireless communications infrastructure solutions that neither company could otherwise achieve on its own. With Arris, we will access new and growing markets, and have greater technology, solutions and employee talent that will provide additional value and benefit to our customers and partners.”

CommScope said that it expects the addressable market for the combined company to be $60 billion and said it would be able to provide end-to-end communications infrastructure solutions including converged small cell solutions for both licensed and unlicensed wireless spectrum and “complementary wired and wireless” infrastructure; broadband access; connected and smart home solutions; and private network offerings for industrial, enterprise and public venues.

The transaction is expected to close in the first half of 2019, and CommScope noted that a former CommScope owner, The Carlyle Group, is reestablishing a minority stake in the combined company, to the tune of $1 billion that equals about 16% of CommScope’s outstanding shares.

CommScope said that after the combination, Edwards will continue to hold his role as president and CEO, and Arris CEO Bruce McClelland and other members of Arris’ leadership will join the combined company. CommScope’s headquarters will stay in Hickory, North Carolina; it will “maintain a significant presence” in Suwanee, Georgia, where Arris is based.

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