CommScope Seeks $750M IPO

Carlyle Group Took the Broadband and Wireless Vendor Private in 2011 for $3.9B
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CommScope is eyeing a return to life as a public company more than two-and-a-half years after Carlyle Group took the technology supplier private in 2011 for $3.9 billion.

The maker of cable broadband and wireless gear, currently owned by private equity firm Carlyle Group, is looking to raise up to $750 million in an initial public offering, according to an S-1 filed Friday (Aug. 2) with the Securities and Exchange Commission.  CommScope said it intends to use the net proceeds to redeem a portion of its 9.25% senior notes due 2019, pay related fees, expenses and premiums, with the remainder going toward general corporate purposes.

The Hickory, N.C.-based company makes a wide range of gear, including data center equipment, small cell antenna and in-building cellular infrastructure, coaxial optical and twisted pair cable, back-up power systems, connectors, and provides network design services.

CommScope, which plans to trade its common stock under the “COMS” symbol, revealed in the S-1 that it posted net income of $33.75 million for the 12 months ended June, 30, 2013, on revenues of $3.48 billion. For calendar year 2012, it generated net income of $5 million on net sales of $3.32 billion. International sales represented 44% of sales in 2012.

However, the situation at its broadband unit is off to a slow start in 2013. CommScope said operating income from its broadband unit decreased $29.1 million in the first three months of 2013, and $36.4 million in the first six months of the year "largely due to a goodwill impairment charge of $28.8 million," plus lower net sales and higher restructuring charges in the 2013 periods.

On the cable front, it has been focusing on products based on the Converged Cable Access Platform (CCAP), a next-gen, dense access architecture that combines the functionality of the edge QAM and the cable modem termination system (CMTS). That will pit it against Arris, Cisco Systems, Casa Systems and Harmonic. CommScope entered the CCAP game in June 2011 via its acquisition of edge QAM startup LiquidxStream Systems.

Its “major” customers and distribution partners include Anixter International, AT&T, Verizon Communications, Ericsson, Alcatel-Lucent, Comcast, T-Mobile and Huawei Technologies, according to the S-1.  Anixter was CommScope’s largest distributor in 2012, accounting for 12.9% of consolidated net sales.

CommScope’s S-1 also revealed that it acquired Redwood Systems, a provider of LED lighting solutions and integrated sensor networks for data centers and buildings, on July 3. CommScope splashed out an initial payment of $10 million, with the potential for additional consideration of up to $37.25 million and retention payments of up to $11.75 million, if net sales reach various levels up to $55 million over specific period through July 31, 2015.

CommScope, founded in 1976, has about 12,500 employees.

J.P. Morgan, Deutsche Bank Securities and BofA Merrill Lynch are lead book-running managers for the proposed initial public offering. Additional book-running managers are Barclays, Credit Suisse Securities, Goldman, Sachs, Jefferies, Morgan Stanley, RBC Capital Markets and Wells Fargo Securities.