CommScope acquires Andrew for $2.6B

June 27, 2007
June 27, 2007 -- The acquisition is expected to be accretive to CommScope's cash earnings per share, excluding special items, in the first full year after closing.

June 27, 2007 -- CommScope, Inc. and Andrew Corp. announced that the companies have entered into a definitive agreement, unanimously approved by their respective boards of directors, under which CommScope will acquire all of the outstanding shares of Andrew for $15.00 per share, with at least 90 percent in cash.

According to a press release, the transaction, which is valued at approximately $2.6 billion, is expected to be accretive to CommScope's cash earnings per share, excluding special items, in the first full year after closing. The $15.00 per share purchase price represents a premium of approximately 13 percent over Andrew's average closing share price for the last 30 trading days, a 21 percent premium over Andrew's average closing share price for the last 60 trading days, and a 16 percent premium over the closing price of Andrew's common stock on Tuesday, June 26, 2007, the last trading day prior to this announcement.

CommScope says the move cements its place as a global leader in infrastructure solutions for communications networks, including structured cabling solutions for the business enterprise; broadband cable and apparatus for cable television applications; and antenna and cable products, base station subsystems, coverage and capacity systems, and network solutions for wireless applications.

The companies say the combination of their respective operations is expected to result in meaningful operating, cost and sales synergies, and other important benefits to shareholders, customers and employees, including: building upon complementary global product offerings that will provide customers with a broader array of infrastructure solutions for video, voice, data and mobility; expanding global distribution and manufacturing capabilities; enhancing growth opportunities by combining marquee brands, innovative technologies, and global service models; wtrengthening industry-leading R&D and intellectual property portfolio; affording scale in procurement, logistics and manufacturing in an increasingly competitive market; diversifying a top-tier customer base; and providing greater opportunities for employees as part of a larger, more diversified global corporation.

Based on CommScope's and Andrew's results for fiscal year 2006, on a pro forma basis, the combined companies would have had sales of approximately $3.8 billion comprised of approximately 35 percent in wireless antenna and cable products; 29 percent in carrier and network solutions; 21 percent in enterprise products; and 15 percent in broadband/cable television solutions. The combined companies' revenues on a geographic basis would have been approximately 57 percent in North America; 24 percent in Europe, the Middle East and Africa; 12 percent in Asia/Pacific Rim; and 7 percent in Latin America. The combined company will have more than 2,200 global patents and pending patent applications and approximately 16,000 employees serving more than 130 countries.

"We are pleased to have reached this agreement with Andrew, which we believe is extremely beneficial to the shareholders of both companies," said Frank M. Drendel, chairman and CEO of CommScope. "By combining CommScope and Andrew, we are enhancing CommScope's position as a worldwide leader in 'last mile' solutions. With the acquisition of Andrew, we are advancing CommScope's stated global strategy and creating important cost reduction and growth opportunities that we believe will drive increased shareholder value."

"We believe that the combination of Andrew and CommScope creates a strong company with long-term advantages for our customers and employees," added Ralph Faison, president and CEO of Andrew Corporation. "Our two companies fit together strategically with leading complementary product offerings and geographical strengths. This transaction [also] provides our shareholders with a significant cash premium."

The combined company expects to generate substantial annual pretax cost savings, excluding one-time transition items, of approximately $90 million to $100 million in the second full year after completion of the transaction, of which approximately $50 million to $60 million are expected to be achieved in the first full year after completion. The cost savings are expected to come from a combination of procurement savings, rationalization of duplicate locations, streamlining overhead and integration of infrastructure, and building upon best practices in technology and manufacturing. Transition cash costs are expected to total approximately $70 million to $80 million in the first two years after completion.

CommScope has also identified potential revenue synergies, including expected benefits from the combination of Andrew's in-building wireless products with CommScope's standing in the enterprise market. In addition, CommScope sees the potential to increase sales of its integrated cabinet solutions through Andrew's global channel to wireless carriers as well as opportunities to expand broadband connectivity product offerings.

Following the close of the transaction, Andrew will become a wholly-owned subsidiary of CommScope. Frank Drendel will remain Chairman and CEO of CommScope, and CommScope will retain its global headquarters in Hickory, North Carolina. The combined company also plans to maintain its Chicago-area presence, exemplified by building upon Andrew's manufacturing and office facility in Joliet, Illinois.

Under the terms of the agreement, each share of Andrew common stock will be converted into $15.00, comprised of $13.50 per share in cash and an additional $1.50 per share in either cash, CommScope common stock, or a combination of cash and CommScope common stock totaling $1.50 per share, at CommScope's option.

If CommScope determines to pay the $1.50 portion of the purchase price entirely in CommScope common stock, each share of Andrew common stock would be converted into $13.50 in cash, plus a fraction of a share of CommScope common stock equal to $1.50 divided by the volume weighted average of the closing sale price of CommScope common stock over the ten consecutive trading days ending two trading days prior to the closing date of the merger.

The total transaction value is approximately $2.6 billion, based on Andrew's estimated 176 million shares outstanding on a fully diluted basis, which includes shares associated with Andrew's existing convertible notes.

CommScope expects to fund the cash portion of the purchase price through a combination of new credit facilities and available cash on hand. CommScope has obtained customary fully underwritten debt financing commitment letters from Bank of America and Wachovia Bank, N.A. (and their respective affiliates).

Following completion of the transaction, CommScope plans to reduce leverage by continuing to grow its historically strong cash flow, improving the combined company's operational performance, and by identifying and selectively divesting non-core or underperforming assets during the first year after completion. CommScope expects to grow its earnings per share through a combination of increased top-line performance, operational improvements and debt reduction.

The companies expect to close the transaction by the end of 2007, subject to completion of customary closing conditions, including effectiveness of a registration statement on Form S-4, approval by Andrew's shareholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any other applicable laws or regulations. The transaction is not conditioned on receipt of financing by CommScope.

Banc of America Securities LLC is acting as financial advisor to CommScope and Duff & Phelps LLC provided a fairness opinion to CommScope. Fried, Frank, Harris, Shriver & Jacobson LLP, Baker & McKenzie LLP and Robinson, Bradshaw & Hinson, P.A. are acting as CommScope's legal counsel. Citi is acting as the primary financial advisor to Andrew, and Merrill Lynch provided a fairness opinion. Mayer, Brown, Rowe & Maw LLP is acting as Andrew's primary outside legal counsel.

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