Arris Group Inc.
(
ARRS
) today announced that it has completed its proposed acquisition of
BigBand Networks Inc. for a total consideration of approximately
$172 million in cash. However, after adjusting $119 million of net
cash in the hands of BigBand, Arris paid a net $53 million to
acquire the former. The acquisition was conducted through a tender
offer for all of BigBand's outstanding shares. Mr. Rajive Dhar,
formerly the SVP of corporate development and strategic planning of
BigBand, has now joined Arris Group as VP and GM for the newly
acquired business division.
We believe the acquisition of BigBand is a major step by Arris
to convert itself as an all IP-converged network architecture
solution provider. BigBand is a specialist in switched digital
video (SDV). Arris has now acquired the required economies of scale
to become the market leader in the SDV segment. The company has
also occupied a rich patent portfolio of BigBand, which is spread
across dense edge QAM technologies, targeted advertisement
insertion, and systems designed to help cable operators migrate to
an IP video architecture.
Further, BigBand will help Arris to diversify its clientele.
Arris is heavily dependent on
Comcast Corp.
(
CMCSA
) and
Time Warner Cable Inc.
(
TWC
), who together accounts for nearly 42% of Arris' total revenue.
With BigBand in its kitty, Arris can now get revenue from other big
cable MSOs, such as
Cablevision Systems Corp.
(
CVC
) and Cox Communications Inc. Most importantly, the two telecom
giants, namely
AT&T
(
T
) and
Verizon Communications Inc.
(
VZ
) are customers of BigBand. This will be a significant
diversification for Arris in the telecom sector.
Arris is confident of generating significant cost synergies from
this acquisition. These two entities have several overlapping
products, which may allow Arris to streamline BigBand business.
Management expects to reduce quarterly operating expenses of
BigBand by $7 million within the third quarter of 2012. The merged
entity may become a formidable rival to other big players, such as
Cisco Systems Inc.
(
CSCO
) and
Motorola Mobility Holdings Inc.
(
MMI
) in the digital video infrastructure industry.
ARRIS GROUP INC (
ARRS
): Free Stock Analysis Report
COMCAST CORP A (
CMCSA
): Free Stock Analysis Report
CISCO SYSTEMS (
CSCO
): Free Stock Analysis Report
CABLEVISION SYS (
CVC
): Free Stock Analysis Report
MOTOROLA MOBLTY (
MMI
): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis
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VERIZON COMM (VZ): Free Stock Analysis Report
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