Arris to Acquire C-COR for $730M

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Arris Group will acquire C-COR for $730 million in cash and stock, the companies announced Sunday, forming what the duo claimed will be the largest pure-play technology vendor to the cable industry.

The companies said the deal has been approved by both boards of directors, but not by shareholders.

“The combination of our two businesses will create the leading pure-play solutions provider to the global cable industry offering a full suite of IP telephony, high-speed data, video infrastructure and video-management solutions,” Arris chairman and CEO Bob Stanzione said, in a prepared statement.

The Arris deal for C-COR comes eight months after Arris launched an unsuccessful bid to buy Tandberg Television. Arris was outbid by telecom-equipment giant Ericsson, which ended up acquiring Tandberg for $1.4 billion in cash.

Arris and C-COR said that together, they would have reported $1.2 billion in revenues over the last 12 months. Arris is a top supplier of cable modem and telephony equipment; C-COR sells broadband-access platforms for cable, video-on-demand systems, and operations support systems.

For his part, C-COR chairman and CEO David Woodle said, “Arris is the best strategic partner for C-COR, allowing us to better serve our worldwide customers with an extensive footprint and as a result we are extremely excited about the potential of this combined company going forward and the value creation it represents.”

According to Arris chief financial officer David Potts, C-COR will help Arris “improve our financial profile, in particular our gross margins.”

In addition, the duo have more than 250 customers worldwide combined, and “our combined customer profile also provides us with significant cross selling opportunities,” Potts said.

The deal, subject to shareholder and regulatory approvals, is expected to close in January.

C-COR had 1,260 employees at last count and Arris reported 781. The companies did not say whether layoffs are expected as a result of the deal, but according to Potts’ statement, “we anticipate that the combined company should enjoy the advantages of economies of scale.”

Earlier this summer, C-COR sold its outside-plant and installation-services business unit to Atlanta-based Source Broadband Services for about $7 million. C-COR retained its network-design and integration business.

Under the terms of the deal, Arris will offer individual C-COR shareholders either a cash payment of $13.75 or 0.9642 Arris shares per share. The offer of $13.75 per C-COR share represents a 39% premium to Friday’s closing price and about a 19% premium to stock’s the 30-day trading average.

Arris’ financial advisor in the transaction is UBS Investment Bank, while Merrill Lynch & Co. is acting as financial advisor to C-COR.

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