On January 31, CommScope (www.commscope.com) completed the acquisition of Avaya's Connectivity Solutions (ACS) business, except for certain international operations that are expected to be completed later this year. CommScope announced the completion on February 2.
The total consideration for the ACS business was adjusted to reflect a higher cash payment, fewer shares of CommScope common stock, and a lower level of assumed liabilities by CommScope than previously announced. The total purchase price consists of $250 million in cash, which was subject to post-closing adjustments, and approximately 1.8 million shares of CommScope common stock. At the time the agreement between the two companies was announced on October 27, 2003, those shares were valued at $22.9 million; at the close of business on January 30, 2004 they were valued at $32.8 million. In addition, CommScope will assume up to $65 million of specified liabilities, primarily related to employee benefits.
Of the $250 million cash, $150 million comes from CommScope's existing cash balances and the remaining $100 million from borrowing under a new five-year, $185 million senior secured credit facility. The new credit facility, which replaces CommScope's previous credit facility, includes a $75 million term loan and a $110 million revolving credit facility. It was underwritten by Wachovia Securities.
CommScope had approximately $206 million in cash and cash equivalents on its balance sheet as of December 31, 2003. The company plans to release fourth-quarter 2003 results on February 19.
In a release announcing the completion, CommScope said the deal "creates a unique combination of global leaders in connectivity solutions for enterprise applications and cable for hybrid fiber-coaxial (HFC) applications. The strategic acquisition also expands CommScope's leadership position in the 'last mile' of telecommunications."
"Systimax Solutions, our new enterprise connectivity company, is already recognized as the global leader in its field," said Frank M. Drendel, CommScope's chairman and chief executive officer. "We intend to build on its tradition of excellence by bringing complementary technologies and renewed commitment to its business. We are also proud to announce the new CommScope Carrier Solutions group that will provide cabinets, cable, and apparatus solutions to telecommunications service providers."