HICKORY, NC — CommScope has agreed to acquire TE Connectivity’s Telecom, Enterprise and Wireless businesses in an all-cash transaction valued at approximately $3 billion. The transaction, which was approved by the boards of directors of both companies, is expected to accelerate CommScope’s strategy to drive profitable growth by entering into attractive adjacent markets and to broaden its position as a leading communications infrastructure provider. In addition, CommScope will have greater geographic and business diversity following the completion of the transaction. The transaction is expected to close by the end of 2015.

The Telecom, Enterprise and Wireless businesses of TE Connectivity, a world leader in fiber optic connectivity for wireline and wireless networks, generated annual revenues of approximately $1.9 billion in its fiscal year ended September 26, 2014, consisting of $1.1 billion from its Telecom business, where it is a world leader; $627 million from Enterprise; and $164 million from Wireless. The combined company’s pro forma results for the twelve months ended September 30, 2014 would have been approximately $5.8 billion in net sales and $1.2 billion in pro forma adjusted EBITDA. The transaction is expected to be in excess of 20 percent accretive to CommScope’s adjusted earnings per share by the end of the first full year after closing and on a pro forma basis, excluding purchase accounting charges, transition costs and other special items.

Bringing Together Complementary Geographic and Customer Coverage, Products and Technologies
“This is an important and transformative acquisition for CommScope, bringing together complementary geographic and customer coverage, products and technologies for the benefit of our stockholders, customers and employees,” said Eddie Edwards, CommScope president and chief executive officer. “This transaction has many clear strategic and financial benefits for all of our stakeholders. It creates enhanced scale with a combined, diversified portfolio that we believe is well-positioned to take advantage of opportunities in the marketplace.”

Transaction Expected to Position CommScope for Future Growth and Value Creation Through:

  • Establishing Leading Positions Across Diverse and Growing Product Segments and Geographies: This transaction is expected to provide CommScope with the opportunity to expand into the adjacent wireline telecom networks/fiber-to-the-X (FTTx) market and meet the steadily growing demand for broadband services in developed and emerging markets. Upon completion of the transaction, CommScope’s overall sales concentration would be more balanced based on the 12 months ending September 30, 2014:

    • Wireless—approximately 46 percent of sales, versus 65 percent;
    • Enterprise—approximately 26 percnet of sales, versus 22 percent; and
    • Broadband Connectivity—approximately 28 percent of sales, versus 13 percent.

  • Furthermore, with TE Connectivity’s strong presence in the Europe, Middle East, Africa and Asia Pacific regions, the combined company is expected to meaningfully expand its footprint and global competitive position.
  • Significantly Expanding Platform for Innovative Solutions: The transaction is expected to substantially expand CommScope’s foundation of innovation with the addition of approximately 7,000 patents and patent applications worldwide from TE Connectivity. Further, TE Connectivity’s leading fiber technology is expected to help CommScope better address a transition to fiber deployments deeper into networks and data centers as consumers and businesses generate increasing bandwidth requirements. With these additional innovative solutions, CommScope expects to solve more customer communications challenges, while providing greater opportunities to its business partners.
  • Creating Complementary Market Opportunities: The combined company is expected to have the technology, solutions and talent to provide greater value and a broader range of services to its customers and partners. Additionally, TE Connectivity’s existing relationships with key industry participants are expected to enable the combined company to meaningfully strengthen its position across multiple markets.
  • Offering Significant Synergy Opportunities and Strong Financial Profile: CommScope expects to realize more than $150 million in annual synergies beginning in the third year following closing, which includes more than $50 million in the first full year. CommScope expects to drive synergies across all areas of the company, including sales, marketing, general and administration, operations, and research and development. The transaction is expected to be in excess of 20% accretive by the end of the first full year after closing and on a pro forma basis, excluding purchase accounting charges, transition costs and other special items.
  • Enhancing Employee Opportunities as Part of Larger Organization: TE Connectivity’s Telecom, Enterprise and Wireless businesses will contribute approximately 10,000 people and 65 facilities to CommScope. This combination is expected to create an even stronger base of talent by uniting two highly-skilled and diverse workforces with a strong commitment to serving customers. As part of a stronger, larger company, CommScope and TE Connectivity employees are expected to have the opportunity to benefit from greater career and professional development opportunities.

Upon completion of the transaction, Edwards, along with other members of the CommScope executive management team, will continue to lead the company. CommScope management will be welcoming members of the TE Connectivity leadership team upon closing of the transaction. CommScope corporate headquarters will remain in Hickory, North Carolina.