RealTime IT News

CommScope Buys Last-Mile Specialist

Broadband cable manufacturer CommScope today announced an acquisition that should push its annual revenues past $1 billion.

The Hickory, N.C., company will pay $263 million in cash and securities for Connectivity Solutions, a unit of telecom equipment maker Avaya . As part of the deal, CommScope will assume $75 million for underfunded pension plans and benefits packages.

"This is a major opportunity for our company and our future," Frank Drendel, CommScope's chairman and CEO said in a conference call.

Connectivity Solutions, employs about 2,000 people at its headquarters in Richardson, Texas, and plants in Omaha, Neb., Bray, Ireland and Brisbane, Australia.

It specializes in voice, data and video cabling for office buildings and telephone central offices. Customers include Cisco, Intel, Sun, Lucent and BellSouth and Verizon.

Avaya said Connectivity Solutions had fiscal 2003 sales of approximately $542 million, just less than CommScope's $555 million.

In addition to a complementary products, a strong balance sheet and customer list, Connectivity Solutions owns more than 1,200 telcom patents, six times Commscope's own intellectual property holdins.

Drendel said Connectivity Solutions will operate as a subsidiary of CommScope's. He said the company there won't be any dropoff in research and development funding. Some costs administrative cost savings will be had, however, and CommScope expects the deal to contribute to earnings in calendar year 2004. The company has earmarked about $25 million for transition costs.

For Avaya, the move is part of an effort to pare its focus to Internet protocol telephony products and services. W. Scott Horne, a spokesman for Basking Ridge, N.J.-based Avaya, said he couldn't predict how the proceeds from the sale will be used.

The deal should close by year's end.