Helix Investment Research • 11 Comments
Mon, Jan. 4, 6:03 PM
- Arris' (NASDAQ:ARRS) $2.1B cash/stock acquisition of set-top/cable infrastructure peer Pace is on the books. Arris previously indicated the deal, which will significantly boost the company's set-top share and (thanks to Pace's U.K. incorporation) lower its tax rate, would close on Jan. 4.
- Arris shareholders own 76% of the combined company, and Pace shareholders the rest. The deal is expected to provide $0.65-$0.75 of EPS accretion over the next 12 months.
- More details will be given during Arris' Feb. 17 Q4 earnings call.
Dec. 22, 2015, 10:50 AM
- With the mandatory waiting period tied to Brazilian regulatory approval (announced on Dec. 3) of Arris' (ARRS -1.2%) planned acquisition of Pace now over, the companies expect the $2.1B deal to close on Jan. 4.
- When the acquisition was first announced in April, Arris forecast it would boost EPS by $0.45-$0.55 within the first 12 months of closing, and (due to Pace's U.K. incorporation) lower the company's tax rate to 26%-28%. Post-acquisition annual sales were predicted to total ~$8B.
Dec. 3, 2015, 9:42 AM
- Shortly after the DOJ ended its probe of the Arris/Pace deal, Brazil's competition authority has granted preliminary approval without restrictions. The approval is expected to become final on Dec. 19.
- Arris (ARRS -0.4%) now expects the $2.1B acquisition, which will make it by far the biggest player in the global pay-TV set-top market, to close in early January. Shares rose 3.7% yesterday in the wake of the DOJ news.
Dec. 1, 2015, 6:48 PM
- The DOJ has ended its antitrust probe of Arris' (NASDAQ:ARRS) planned $2.1B purchase of set-top rival Pace without condition. The action follows clearances from German, Portuguese, South African, and Colombian regulators.
- Brazilian approval remains outstanding. In October, Arris adjusted its ETA for the Pace deal's closing to late December or Q1 from late 2015 on account of regulatory reviews.
Oct. 16, 2015, 6:06 PM
- With U.S. (DOJ), Brazilian, and Colombian regulators still probing the deal, Arris (NASDAQ:ARRS) now thinks its planned $2.1B acquisition of U.K. set-top rival Pace won't occur until late December or Q1. Arris previously forecast the deal will close in late 2015.
- The company insists it's still confident the deal will close, and states the DOJ's scrutiny revolves around Arris and Pace's optical transmission products (rather than their core set-top offerings).
- CEO Bob Stanzione: "Based on our current understanding of the Antitrust Division's areas of continued focus and given the opportunities for the combined business and the potential synergies, we believe that the non-GAAP EPS accretion ranges for the first 12 months following the combination, previously estimated and disclosed by ARRIS, continue to remain possible." In addition to boosting Arris' set-top/video infrastructure share, the deal provides tax benefits on account of Pace' U.K. incorporation.
- Arris +1.1% after hours to $29.28. Q3 results arrive on the afternoon of Oct. 28.
Jun. 29, 2015, 5:54 PM
- The DOJ has placed Requests for Additional Information (i.e. "second requests") with both Arris (NASDAQ:ARRS) and U.K. set-top rival Pace regarding Arris' planned $2.1B acquisition of Pace.
- Likely drawing the DOJ's attention: Arris/Pace will easily be the world's biggest set-top vendor, with a share over 3x that of #2 Cisco. However, Synergy Research estimates the combined company's share of the fragmented market will still be just slightly over 30%.
- Arris "continues to anticipate" the deal, which stands to lower its tax rate and provide many other bottom-line synergies, will close in late 2015.
Apr. 22, 2015, 5:17 PM
- Less than 3 years after striking a deal to buy Motorola Home for $2.35B, Arris (NASDAQ:ARRS) has announced it's buying U.K. set-top hardware/software provider Pace for $2.1B in cash and stock.
- Arris is paying £1.325/share in cash and issuing 0.1455 shares for each Pace share traded in London. Before accounting for the AH surge in Arris' shares, the price represents a 29% premium to Pace's Wednesday close.
- Pace shareholders will own 24% of the post-merger company. BofA/Merrill is providing Arris with financing. The fragmented nature of the global set-top industry could help secure regulatory approval.
- The deal is expected to close in late 2015. Arris chairman/CEO Bob Stanzione will maintain his current position. Arris expects the deal to boost EPS by $0.45-$0.55 in the first 12 months after closing, and (thanks to U.K. incorporation) cut its tax rate to 26%-28%. The combined company will have ~$8B/year in sales; Arris 2014 sales totaled $5.32B.
- Pace's product line includes cable, satellite, and IPTV set-tops; cable, DSL, and fiber modems/gateways; set-top and service management software; and last-mile optical networking equipment. The company has strong exposure to European pay-TV providers.
- Arris has soared to $38.40 AH. Q1 results arrive on April 29.
Apr. 14, 2015, 9:49 AM
- Charter Communications (NASDAQ:CHTR) and set-top vendor Arris Group (NASDAQ:ARRS) have formed a joint venture to buy cloud interface provider ActiveVideo for about $135M.
- Arris will own 65% and act as the sales channel for ActiveVideo's CloudTV platform, which is the heart of Charter's Spectrum Guide subscriber interface.
- Among ActiveVideo's other customers: Cablevision, Liberty Global, Deutsche Telekom, TWC, J:COM, Philips and Roku.
- The deal is expected to close in Q2.
Apr. 12, 2013, 10:11 AMThe DOJ signs off on Arris' (ARRS) $2.35B purchase of Motorola Home from Google (GOOG), paving the way for the acquisition to close around April 17. The deal stands to create a giant in the set-top/cable infrastructure space, and a major rival to Cisco's Scientific-Atlanta unit. (previous) | Apr. 12, 2013, 10:11 AM
Dec. 19, 2012, 6:28 PM
Google (GOOG) is selling Motorola Home for $2.35B ($2.05B in cash + $300M in stock) to Arris (ARRS). The division, which sells set-top boxes, infrastructure gear, and other hardware to pay-TV and broadband providers, had revenue of $3.4B in the 4 quarters ending Sep. 30. Arris, which closed with a market cap of just $1.65B, is halted. The deal will be "significantly accretive" to Arris' EPS and give Google a 15.7% stake in the company, which will probably have to raise a lot of debt to finance the purchase. (previous)| Dec. 19, 2012, 6:28 PM | 6 Comments
Dec. 10, 2012, 2:08 AM
Cable infrastructure vendor Arris (ARRS) and U.K. set-top box maker Pace have "made the most compelling bids" for Motorola Mobility's (GOOG) set-top/cable infra unit, Bloomberg reports. A complex financing structure in which Google maintains equity and patents might prevent a deal from closing this year. P-E firms are said to be uninterested in the unit, which has to contend with an industry shift towards cloud-based apps, and potentially costly litigation with TiVo. Cisco's (CSCO) cable unit could benefit from any turmoil related to the sale. (previous)| Dec. 10, 2012, 2:08 AM
Oct. 11, 2011, 7:34 AM
Cable infrastructure gear vendor Arris (ARRS) has agreed to acquire smaller peer BigBand Networks (BBND) for $2.24/share in cash, a 76% premium to BigBand's Monday close. BigBand was a pioneer in the development of switched digital video technology, which increases cable network capacity, but has fallen on hard times as competitors have caught up.| Oct. 11, 2011, 7:34 AM
May 27, 2011, 7:56 AM
May 26, 2011, 6:01 PM
Communications equipment maker Arris (ARRS) is in talks to buy SeaChange International (SEAC), a maker of digital video gear, WSJ reports. TiVo (TIVO) and NDS Group, a technology provider for pay-TV operators owned by News Corp. (NWS) and buyout firm Permira, also reportedly considered buying SEAC but have lost interest.| May 26, 2011, 6:01 PM | 1 Comment