Cable Operators

CommScope Going Private

11/01/2010 12:01 AM Eastern

CommScope has reached a deal with private-equity
firm Carlyle Group, under which the cable and telecommunications
equipment and component maker will go
private in a deal valued at $3.9 billion.

The transaction is expected to close in the first
quarter of 2011. Under the terms of the merger agreement,
Carlyle will acquire all of the outstanding
shares of CommScope common stock for $31.50 per
share in cash.

“We are proud to enter into this agreement with Carlyle
and believe this transaction is in the best interest of
CommScope and our stockholders,” chairman and CEO
Frank Drendel said in a statement.

Drendel continued, “After careful and thorough analysis,
together with our independent advisors, our board
of directors unanimously approved this transaction with
Carlyle, which has a strong reputation and global network,
and a proven record of success in acquiring and guiding
companies like CommScope. Further, we are pleased
that this transaction appropriately recognizes the value
of CommScope’s customer relationships, technology and
solutions, financial management and global market position,
while providing our stockholders with a significant
cash premium for their investment.”

CommScope sells coaxial cable, optical solutions and
related products to cable operators, as well as wireless
equipment and cabinets for DSL and fiber-to-the-node
networks.

MORE FLEXIBILITY

Eddie Edwards, CommScope’s president and chief
operating officer, said in a statement that as a private
company, “CommScope will have greater flexibility to
focus on our long-term strategic direction as a global
leader in infrastructure solutions for communications
networks.”

Carlyle expects Drendel, Edwards and other members of
CommScope’s executive management team will continue
to lead the company after the deal closes.

CommScope’s board unanimously approved the agreement
with Carlyle and recommended that the company’s
stockholders approve the proposed merger and merger
agreement. The deal is subject to the approval of CommScope’s
shareholders, regulatory agencies and other
usual closing conditions.

According to Carlyle and CommScope, the deal has
fully committed financing from Carlyle Partners V, a $13.7
billion U.S. buyout fund, and Carlyle Europe Partners III,
a €5.4 billion European buyout fund. Debt financing will
be provided by J.P. Morgan.

Under the agreement, CommScope may solicit
superior proposals from third parties for a period of 40
calendar days continuing through December 5, 2010, but
would be obligated to pay a $43.3 million break-up fee to
Carlyle if it accepted an alternate bid.

Allen & Company LLC is serving as financial adviser,
and Gibson, Dunn & Crutcher LLP is serving as legal advisor
to CommScope in connection with the transaction.
J.P. Morgan is serving as financial advisor to Carlyle, and
Alston & Bird LLP and Latham & Watkins LLP are serving
as Carlyle’s legal advisers.

Carlyle’s cable industry holdings include a stake in
Insight Communications. In April, the private-equity firm
sold half its stake in the MSO.

September
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