CommScope 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 Hickory, N.C.-based company had announced Monday that it was in discussions with Carlyle on a potential deal.
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," CommScope 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.
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 advisor 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 advisors.
Carlyle's cable industry holdings include a stake in Insight Communications. In April, the private-equity firm sold half its stake in the MSO.