ARRIS Group Inc. (Nasdaq: ARRS) and C-COR Incorporated (Nasdaq: CCBL) told OSS News Review today that they have entered into a definitive agreement whereby ARRIS will acquire C-COR for a purchase price of approximately $730 million in a mix of cash and ARRIS stock. With over 250 customers around the world, the companies collectively reported revenues of over $1.2 billion over the past twelve months and the merged company will be the largest pure-play provider of equipment and solutions to the cable industry.
As cable operators, telcos and satellite TV providers compete for subscribers, the triple play of voice, data and video, and the eventual quad play with mobile, is driving an increased demand for bandwidth and the need for advanced video management solutions. Additionally, as new services such as IP telephony, high definition television and on-demand television emerge, the pressure on bandwidth will increase further, pushing network capacity requirements higher and higher. These trends support the combination of ARRIS and C-COR and will drive the future success and growth of the new company with its highly scalable, revenue producing technologies for high speed data, telephony, optical and network access infrastructure and video management solutions.
The combination of ARRIS and C-COR:
— Creates the leading pure play cable solutions company with over $1.2 billion in sales over the past twelve months
— Expands ARRIS’ product portfolio and addressable market and enhances its video growth opportunities
— Improves competitive positioning versus diversified industry suppliers
— Diversifies revenue across core customer relationships and enables deeper participation in network infrastructure capacity spending
— Creates a global technologically diverse engineering team with a broader and stronger platform from which to drive portfolio expansion
— Enhances financial profile with improved margin expansion
Under the terms of the definitive agreement, approved by the Boards of Directors of both companies, each share of common stock of C-COR will be converted into the right to receive, at the election of each of the individual holders of C-COR shares, either (i) a cash payment of $13.75 or (ii) 0.9642 shares of ARRIS, subject to pro ration if the elections exceed approximately 51% in cash or 49% in stock. The stock component of the consideration is subject to a collar if the average price of ARRIS stock for a ten trading day period ending three days prior to closing is greater than $15.69 or less than $1283.
The merger consideration of $13.75 per C-COR share represents approximately a 19% premium to the 30 day trading average of C-COR common stock and a 39% premium to the closing price of C-COR common stock on September 21, 2007. Subject to affirmative approval of both ARRIS and C-COR shareholders, Hart-Scott-Rodino approval and other clearances, the transaction is expected to close in January 2008.
Bob Stanzione, ARRIS Chairman and CEO, said, “ARRIS and C-COR have had a long standing business relationship. The complementary nature of our portfolios has led us to interact often in supporting our common customers. 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. The combined company will be extremely well positioned to deliver cross-platform solutions aimed at key customer spending initiatives including switched digital video, next generation video on-demand and digital advertising infrastructure. The combination also enables us to build on our leadership positions in cable IP telephony, cable optical and access infrastructure and cable modem termination systems. Further, this combination will allow us to be at the forefront of innovation within our industry and will enable us to introduce products and solutions that neither company would be able to develop alone.”
David Woodle, Chairman and CEO of C-COR, said, “ARRIS’ proven track record, complementary market positions, strong balance sheet and stellar industry reputation make the combination attractive for our customers, shareholders and employees. Combining these two companies allows us to transcend what we have accomplished individually” Woodle added, “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. Moreover, with the significant stock component offered in the transaction, C-COR’s shareholders have a meaningful opportunity to participate in realization of that
“We anticipate that the transaction will improve our financial profile, in particular our gross margins”, said David Potts, Chief Financial Officer, ARRIS. “Our combined customer profile also provides us with significant cross selling opportunities. Furthermore, we anticipate that the combined company should enjoy the advantages of economies of scale. With respect to the capital structure, very importantly, the transaction was structured to ensure that the combined company will have a robust balance sheet to support operations and provide the flexibility to pursue other strategic initiatives.”
UBS Investment Bank is acting as financial advisor and Troutman Sanders LLP is acting as legal advisor to ARRIS in connection with the transaction. Merrill Lynch & Co. is acting as financial advisor and Ballard Spahr Andrews & Ingersoll, LLP is acting as legal advisor to C-COR.
Conference Call and Webcast
A joint conference call and webcast with a presentation and discussion of this transaction will be held at 8:30 AM. Eastern Time, September 24, 2007. The conference call will be broadcast live via the Internet at:http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=87823&eventID=1657032Presentation materials for the call will also be available for viewing at both the ARRIS (www.arrisi.com and C-COR (www.c-cor.com) Investor Relations websites. Those wishing to participate in the conference call via the telephone may dial-in at 800-329-9097, international (617) 614-4929, access code: 72341588. A telephone replay will be available from 10:30 am Eastern Time on September 24, 2007 through midnight, Eastern Time October 01, 2007 by dialing 888-286-8010, international (617) 801-6888 access code: 26425626. The conference call replay will also be available via webcast through the ARRIS Investor Relations website at www.arrisi.com and the C-COR Investor Relations website at www.c-cor.com.
ARRIS provides broadband local access networks with best-in-class video, high-speed data, mobile and fixed-line telephony systems for the delivery of voice, video and data to their residential and small-to-medium sized business customers. ARRIS complete solutions enhance the reliability and value of converged services from the network to the end-user. Additionally, ARRIS provides a complete set of tools and cable system infrastructure products. Headquartered in Atlanta, Georgia, USA, ARRIS has R&D centers in Atlanta, Chicago, Cork, Ireland and Shenzhen, China and operates support and sales offices throughout the world. ARRIS common stock is listed on the NASDAQ Global Market (Symbol: ARRS). For additional information regarding ARRIS, visit www.arrisicom.
C-COR enables its global customer base to confidently grow, manage and deliver next-generation products and services to consumers. The Company’s integrated access and management platforms deliver highly reliable and flexible voice, video and data, and support quick launch and cost effective scaling of new services. C-COR’s common stock is listed on the NASDAQ Global Market (Symbol: CCBL). For additional information regarding C-COR, visit www.c-cor.com.