Expands CommScope's Global Leadership in Infrastructure Solutions for Communications
Networks
Expected to be Accretive to CommScope's Cash Earnings per Share, Excluding
Special Items, in First Full Year after Closing
HICKORY, N.C. and WESTCHESTER, Ill., June 27 /PRNewswire-FirstCall/ -- CommScope,
Inc. (NYSE: CTV) and Andrew Corporation (Nasdaq: ANDW) today 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, at least 90 percent
in cash, creating a global leader in infrastructure solutions for communications
networks.
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.
Key Strategic Benefits of the Transaction
The combined company will be 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 combination of
the companies' 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;
Strengthening industry-leading R&D and intellectual property portfolio;
Affording scale in procurement, logistics and manufacturing in an increasingly
competitive market;
Diversifying 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 Chief Executive Officer of CommScope. "By
combining CommScope and Andrew, we are enhancing CommScope's position as a worldwide
leader in 'last mile' solutions. Combining our innovative technologies, premier
brands and a top-tier customer base, we will expand our global service model
and create an enhanced offering of communications infrastructure solutions that
addresses a broader spectrum of customer needs. 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."
Mr. Drendel continued, "We are also pleased to welcome Andrew's talented
and dedicated employees to the CommScope team. We intend to invest in the combined
business for profitable growth, and the employees of both companies will be
important to our continued success. CommScope is a proven and successful integrator
of strategic transactions and we expect to begin realizing the benefits of this
combination immediately after the transaction closes and enjoy them fully over
the next few years."
"We believe that the combination of Andrew and CommScope creates a strong
company with long-term advantages for our customers and employees," said
Ralph Faison, President and Chief Executive Officer of Andrew Corporation. "Our
two companies fit together strategically with leading complementary product
offerings and geographical strengths. This transaction provides our shareholders
with a significant cash premium and offers our global employees an even more
promising future as part of a larger and more diversified company. We are excited
to unite the strengths of Andrew and CommScope and further expand our range
of services to the benefit of our many customers around the world."
Cost Savings and Revenue Synergies
Given CommScope's track record of successfully integrating acquisitions,
manufacturing discipline and commitment to operational excellence, 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. No assurance can be given that these cost savings can be
achieved in the amounts or during the periods predicted. 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 industry-leading in- building wireless
products with CommScope's global leadership in the Enterprise market. In addition,
CommScope sees the potential to increase sales of its integrated cabinet solutions
through Andrew's leading 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 state-of-the-art manufacturing and office facility
in Joliet, Illinois.
Terms, Financing and Capital Structure
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.
Approvals and Timing
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.
Advisors
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.
Conference Call Information
CommScope and Andrew executives will discuss the transaction with analysts
and investors on a conference call today at 10:00 a.m. ET (9:00 a.m. CT). To
participate in the conference call, please dial 1-888-802-8577 (U.S. dial-in)
or +1-973-935-8754 (international dial-in). The conference ID number is: 8957647.
Please dial in 10-15 minutes before the start of the call to facilitate a timely
connection. A live webcast of the call will be available to all interested parties
on CommScope's and Andrew's websites at www.commscope.com (under "Investor
Relations") and www.andrew.com (under "Investors"). Accompanying
slides will be available on CommScope's and Andrew's websites.
For those unable to listen to the live conference call, a telephone replay
will be available at 1-877-519-4471 (U.S. dial-in) or +1-973-341-3080 (international
dial-in). The conference ID number for the replay is: 8957647. The telephone
replay will be available beginning June 28, 2007 at 8:00 am ET through July
6, 2007 at 11:59 pm ET.
About CommScope
CommScope, Inc. (NYSE: CTV - www.commscope.com) is a world leader in infrastructure
solutions for communication networks. Through its SYSTIMAX(R) Solutions(TM)
and Uniprise(R) Solutions brands CommScope is the global leader in structured
cabling systems for business enterprise applications. It is also the world's
largest manufacturer of coaxial cable for Hybrid Fiber Coaxial applications
and one of the leading North American providers of environmentally secure cabinets
for DSL and FTTN applications. Backed by strong research and development, CommScope
combines technical expertise and proprietary technology with global manufacturing
capability to provide customers with high-performance wired or wireless cabling
solutions.
About Andrew
Andrew Corporation (Nasdaq: ANDW) designs, manufactures and delivers innovative
and essential equipment and solutions for the global communications infrastructure
market. The company serves operators and original equipment manufacturers from
facilities in 35 countries. Andrew (www.andrew.com), headquartered in Westchester,
Ill., is an S&P MidCap 400 company founded in 1937.
Forward-Looking Statements
This press release contains forward-looking statements regarding, among other
things, the proposed business combination between CommScope and Andrew and the
anticipated consequences and benefits of such transaction, and other financial
and operational items relating to CommScope and Andrew. Statements made in the
future tense, and statements using words such as "intend," "goal,"
"estimate," "expect," "expectations," "project,"
"projections," "plans," "anticipates," "believe,"
"think," "confident" and "scheduled" and similar
expressions are intended to identify forward-looking statements. Forward- looking
statements are not a guarantee of performance and are subject to a number of
risks and uncertainties, many of which are difficult to predict and are beyond
the control of CommScope or Andrew. These risks and uncertainties could cause
actual results to differ materially from those expressed in or implied by the
forward-looking statements, and therefore should be carefully considered. Relevant
risks and uncertainties relating to the proposed transaction include, but are
not limited to: the fact that Andrew may be required to write off a portion
of the $412 million of Base Station Subsystems goodwill as a non-cash charge
to earnings as reported in Andrew's quarterly report on Form 10-Q for the period
ended March 31, 2007; the risk that required regulatory review and approval
may not be obtained in a timely manner, if at all; Andrew's shareholders may
not approve the proposed transaction; the anticipated benefits and synergies
of the proposed transaction may not be realized; the integration of Andrew's
operations with CommScope could be materially delayed or may be more costly
or difficult than expected; the proposed transaction may not be consummated;
legal proceedings may be commenced by or against CommScope or Andrew. Relevant
risks and uncertainties generally applicable to CommScope and Andrew include,
but are not limited to: changes in cost and availability of key raw materials
and the ability to recover these costs from customers through price increases;
customer demand for products and the ability to maintain existing business alliances
with key customers or distributors; the risk that internal production capacity
and that of contract manufacturers may be insufficient to meet customer demand
for products; the risk that customers might cancel orders placed or that orders
currently placed may affect order levels in the future; continuing consolidation
among customers; competitive pricing and acceptance of products; industry competition
and the ability to retain customers through product innovation; possible production
disruption due to supplier or contract manufacturer bankruptcy, reorganization
or restructuring; successful ongoing operation of our vertical integration activities;
ability to achieve expected sales, growth and earnings goals; costs of protecting
or defending intellectual property; ability to obtain capital on commercially
reasonable terms; regulatory changes affecting us or the industries we serve.
For a more complete description of factors that could cause such a difference,
please see CommScope's filings with the Securities and Exchange Commission (SEC),
which are available on CommScope's website or at www.sec.gov, and Andrew's filings
with the SEC, which are available on Andrew's website or at www.sec.gov. In
providing forward-looking statements, neither CommScope nor Andrew intends,
and neither undertakes any duty or obligation, to update these statements as
a result of new information, future events or otherwise.
Additional Information
In connection with the proposed merger, CommScope intends to file a registration
statement with the SEC on Form S-4 and CommScope and Andrew expect to mail a
proxy statement/prospectus to Andrew's stockholders containing information about
the merger. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION
STATEMENT AND THE PROXY STATEMENT/PROSPECTUS CAREFULLY WHEN THEY ARE AVAILABLE.
The registration statement and the proxy statement/prospectus will contain
important information about CommScope, Andrew, the merger, and related matters.
Investors and security holders will be able to obtain free copies of these documents
through the web site maintained by the SEC at www.sec.gov. In addition to the
registration statement and the proxy statement/prospectus, CommScope and Andrew
file annual, quarterly, and special reports, proxy statements, and other information
with the SEC. Printed copies of these documents can also be obtained free of
charge (other than a reasonable duplicating charge for exhibits to our reports
on Form 10-K, Form 10-Q and Form 8-K) by any stockholder who requests them from
either CommScope's or Andrew's Investor Relations Department:
Investor Relations
CommScope, Inc 1100 CommScope Place, SE P.O. Box 339 Hickory, North
Carolina 28602 U.S.A. Phone: 1-828-324-2200 Fax: 1-828-982-1708 E-mail:
investor.relations@commscope.com
Investor Relations Andrew Corporation 3 Westbrook Corporate Center Suite
900 Westchester, Illinois 60154 U.S.A. Phone: 1-800-232-6767 or 1-708-236-6616 Fax:
1-708-492-3774 E-mail: GlbWWW-Contact-InvestRelations@andrew.com
CommScope, Andrew and their respective directors and executive officers and
other members of management and employees may be deemed to be participants in
the solicitation of proxies from Andrew stockholders in connection with the
proposed transaction. Information about CommScope's directors and executive
officers and their ownership of CommScope common stock is set forth in the definitive
proxy statement for CommScope's 2007 annual meeting of stockholders, as filed
by CommScope with the SEC on Schedule 14A on March 16, 2007. Information about
Andrew's directors and executive officers and their ownership of Andrew common
stock is set forth in the definitive proxy statement for Andrew's 2007 annual
meeting of stockholders, as filed by Andrew with the SEC on Schedule 14A on
December 29, 2006. Other information regarding the participants in the proxy
solicitation will be contained in the proxy statement/prospectus and other relevant
materials to be filed with the SEC when they become available.
SOURCE:
CommScope, Inc.
CONTACT:
For CommScope: Investor Relations - Phil Armstrong Investor Relations
& Corporate Communications +1-828-323-4848 phil.armstrong@commscope.com
Media Relations - Matthew Sherman msherman@joelefrank.com
Jeremy Jacobs jjacobs@joelefrank.com both of Joele Frank
Wilkinson Brimmer Katcher +1-212-355-4449
For Andrew -
Investor Relations Lisa Fortuna Director of Investor Relations +1-708-236-6507 lisa.fortuna@andrew.com
Media Relations - Rick Aspan Director of Public Relations +1-708-236-6568 publicrelations@andrew.com
|