Telco TV

Arris Closes BigBand Deal

11/21/2011 10:24 AM Eastern

Arris Group completed its tender offer for all outstanding shares of BigBand Networks' common stock, and the company said it expected to officially close the $53 million deal Monday.

In an investor presentation last month, Arris said it plans to "optimize cost structure consistent with current sales levels" at BigBand. Arris is aiming for $7 million in quarterly opex savings by the third quarter of 2012, which will be "primarily realized" in the first quarter of 2012.

Arris paid $2.24 per share in cash for BigBand, worth $172 million in cash, or $53 million net of BigBand's cash on hand.

Last week, Israeli business newspaper Globes reported that Arris let go BigBand's founders -- president and CEO Amir Bassan-Eskenazi and Ran Oz, who resigned as CTO earlier this year while staying on in an advisory role -- and laid off 15 employees including senior vice president of global research and development Yaki Avimor.

In an interview Monday, Stan Brovont, Arris's senior vice president of marketing and business development, said that because Arris had not completed the acquisition of BigBand, Arris has not taken any personnel-related actions with respect to BigBand.

"We've not made that announcement formally" about the departure of Bassan-Eskenazi or other BigBand executives, Brovont said. "There will be an orderly transition period. We are asking a lot of the BigBand people to stay with us for the next several weeks and months," adding that Bassan-Eskenazi is still assisting with the acquisition process. Bassan-Eskenazi previously announced he expected to leave Arris at some point following the takeover.

Separately, Arris confirmed Monday that Rajive Dhar, BigBand senior vice president of corporate development and strategic planning, will become vice president and general manager of the BigBand products division. Dhar, who in 2009 left as Arris's head of corporate strategy and planning to join BigBand, will report to Bruce McClelland, president of Arris's Broadband Communications Group.

Arris is currently not disclosing the expected headcount reductions at BigBand. "That's still a little bit up in the air," Brovont said. "We only announced [the BigBand acquisition] five weeks ago. We do have plans laid in place for today, and our No. 1 goal is to make sure our original customers and the new customers with BigBand are all well taken care of."

BigBand had 401 employees at the end of the second quarter of 2011, after counting 465 employees at the end of 2010. Arris currently has 1,940 employees.

"We are pleased to announce the close of our acquisition of BigBand and welcome the talented professionals joining Arris around the world," Arris chairman and CEO Bob Stanzione said in a statement. "The acquisition supports our strategy of expanding our video product suite and investing in the evolution towards network convergence on an all-IP platform. This expanded portfolio and access to new market channels will provide greater opportunities to grow our customer base worldwide."

Arris, historically a cable voice and data gear supplier, picks up BigBand's leading switched digital video platform, as well as its next-generation Internet-protocol TV, video-processing and advanced advertising platforms.

Arris said BigBand's employee expertise and products are expected to "accelerate time-to-market and increase opportunities for Arris in several fast-growing product areas," including the Converged Cable Access Platform (CCAP) architecture defined by CableLabs, local and targeted advertising, IP video distribution, and advanced video processing and compression. Arris also cited BigBand's portfolio of more than 70 issued and pending patents.

Arris has R&D centers in Suwanee, Ga., at its corporate headquarters; Beaverton, Ore.; Chicago; Kirkland, Wash.; State College, Pa.; Wallingford, Conn.; Waltham, Mass.; Cork, Ireland; and Shenzhen, Guandong, China.

In a letter to BigBand employees following the announcement of the Arris bid, Bassan-Eskenazi said he expects Arris to keep all of BigBand's existing products "and all of our roadmap commitments." In addition, he said, there is no plan to close any of BigBand's current locations.

BigBand's customers include Comcast, Time Warner Cable, Cox Communications, Cablevision Systems, Charter Communications and Verizon Communications.

 

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