ARRIS Releases Details of $1.2B Acquisition of TANDBERG Television and Tuesday, January 16th, 8:30 AM EST Conference Call
January 15 2007 - 3:49PM
PR Newswire (US)
SUWANEE, Ga., Jan. 15 /PRNewswire-FirstCall/ -- ARRIS Group, Inc.
(NASDAQ:ARRS) has agreed to launch a public tender offer for
TANDBERG Television, one of the world's leading suppliers of
digital video and IPTV hardware, software and services for 96
Norwegian Kroner per share, comprised of a mix of cash and newly
issued ARRIS shares. The transaction provides ARRIS the depth and
scale to prosper in the high growth video content creation,
management and distribution markets to complement its market
leadership in voice over IP and high speed data solutions. The
offer values the transaction at approximately US $1.2B at the
exchange rate as of January 12, 2007. TANDBERG Television's board
and senior management are unanimously recommending the offer to its
shareholders. Highlights - At closing, TANDBERG Television
shareholders will receive no more than NOK 16 in ARRIS shares and
at least NOK 80 in cash for each TANDBERG Television share held. -
The actual number of shares issued will be determined based upon
the average closing price of ARRIS common stock as reported on the
NASDAQ Global Market for the 10 trading days preceding the second
trading day prior to the date of the closing of the transaction.
The number of shares to be issued will not exceed 19.9% of ARRIS'
outstanding shares. Based on the January 12, 2007 exchange rate and
closing price for ARRIS shares, ARRIS will issue approximately
15.4M shares or 14.3% of outstanding shares on a fully diluted
basis. - Subject to actual cash balances at close, ARRIS
anticipates that the transaction will be financed with
approximately $200 million of new equity, $520 million of new debt
with the remainder coming from combined cash reserves. Post
transaction the Company expects to have approximately $100 million
in cash and access to a new $25 million revolving credit facility.
UBS Investment Bank is arranging the debt financing for this
transaction. - The transaction is expected to be consummated via a
tender offer during the second quarter 2007. - Jan Christian
Opsahl, Chairman of TANDBERG Television since 1988, has agreed to
join the board of ARRIS upon completion of the transaction. ARRIS
is being advised in the transaction by UBS Investment Bank,
Advokatfirmaet Steenstrup Stordrange DA, and Troutman Sanders LLP.
TANDBERG Television is being advised by Deutsche Bank Securities,
Inc.; Morris, Manning and Martin; and Wikborg, Rein & Co. The
offer is being made pursuant to a Transaction Agreement between
ARRIS and TANDBERG Television that provides for, among other
things, the making of the offer, representations and covenants by
the parties, restrictions on TANDBERG Television's ability to
further market the company, and the payment to ARRIS of a
termination fee under certain circumstances. Transaction Benefits
Combining the resources and experience of ARRIS and TANDBERG
Television will produce a new company, unique in its ability to
enable voice, video and data over any network and to any device.
ARRIS is a leading global provider of VoIP, data broadband network
equipment and consumer premises devices; TANDBERG Television is a
market leader in both the digital video sector and the global video
processing market with award-winning solutions for advanced
compression, on-demand and interactive television. ARRIS and
TANDBERG Television have a strong shared philosophy of innovation
and track-records of profitable growth. The new company will have a
significant global presence with over 1600 employees and 2000+
customers in more than 100 countries. ARRIS' strong North American
cable business and strategic customers in key international markets
will be significantly expanded through TANDBERG Television's
international market leadership position in IPTV, HDTV and
on-demand television. "The combination of ARRIS and TANDBERG
Television is positive for the digital media industry and a truly
exceptional opportunity for both companies," said Bob Stanzione,
Chairman & CEO of ARRIS. "By bringing together these two market
leaders we are able to expand on our vision to be the global leader
in the provision of digital IP infrastructure and to enable voice,
video and data to be delivered over integrated broadband networks
from the content provider to the head-end to the home. With this
merger, we are creating a new force, with best-in-class
technologies and an outstanding team of people with a unique
understanding of all service provider networks, the technologies
that enable them, and the content that travels through them."
Stanzione continued, "The transaction further enhances our growth
opportunities by adding several products to our portfolio that
enable us to address the global telecom, satellite, and broadcast
video markets that have historically been TANDBERG Television's
largest customers. These markets are expected to grow rapidly,
allowing ARRIS to capture significant capital spending in these
markets. We will give the existing TANDBERG Television team the
support they need to continue to satisfy and earn the loyalty of
their current and potential customers. In addition, we see many
opportunities in leveraging the great engineering resources from
both companies to meet the evolving technology needs of our
customers worldwide." "Our customers are increasingly relying on
next generation technologies to help them create and distribute
converged and differentiated voice, data and video services," said
Eric Cooney, CEO of TANDBERG Television. "There is a clear benefit
in being able to source these solutions from one trusted partner.
The combination of ARRIS and TANDBERG Television is ideally placed
to provide the technologies, the knowledge and the systems delivery
and integration expertise that our customers around the world can
rely on to build profitable digital businesses." After diligent,
thorough review, the Board of Directors of TANDBERG Television has
unanimously recommended that the shareholders accept the ARRIS
offer. "The on-going industry consolidation amongst our key
customer base creates a demand for companies that can offer an
increasing scale and scope of supply on a global basis. The
combination of ARRIS and TANDBERG Television clearly creates that
market leading supplier of voice, video and data solutions," said
Jan Christian Opsahl, Chairman of TANDBERG Television. "The terms
of the transaction are very positive for the continued financial
growth of our Company," said David Potts, ARRIS EVP & CFO. "We
anticipate that the transaction will improve our overall gross
margin and is expected to be accretive in 2008, excluding
amortization of intangibles and non-cash equity compensation
expense." Attached to the press release is a summary of each
company's financial profile. TANDBERG Television reports its
results under International Financial Reporting Standards ("IFRS").
ARRIS reports its results under US GAAP. There are a number of
differences between IFRS and US GAAP accounting standards.
Historical and pro forma financial information for TANDBERG
Television or the combined companies on a US GAAP basis are not
presently available but will be reconciled and provided on a Form
8-K filed by ARRIS following the successful completion of the
transaction. ARRIS and TANDBERG Television anticipate that such
reconciliation will result in both revenues and expenses for
TANDBERG Television being recognized in different periods than
reported under IFRS. Under certain circumstances, TANDBERG
Television revenues and costs recognized under IFRS, but deferred
in the US GAAP reconciliation, will not be recognized in future
periods as a result of customary purchase accounting. These non-
cash US GAAP reconciling adjustments and the non-cash purchase
accounting adjustments could be substantial. Conditions to the
Offer - Receipt of valid and unconditional acceptances for more
than 90% of TANDBERG Television's shares. - No change in the share
capital or number of shares, no dividend, and no issuance of any
instrument giving shareholders the right to call shares on the part
of TANDBERG Television. - Completion of all necessary governmental
and regulatory approvals on terms acceptable to ARRIS. - No
material adverse change and no legislation, regulation, decision of
any court or public authority, or other measures including third
party actions, beyond ARRIS' control that would prevent the
acquisition. - Compliance by TANDBERG with the covenants included
in the Transaction Agreement. Conference Call Details ARRIS
management will conduct a conference call and webcast at 8:30 am
EST, Tuesday, January 16, 2007, to discuss the details of this
transaction. Information on participating in the conference call
and webcast will be available at
http://www.arrisi.com/investor_relations/conf_call/. The call will
be moderated by Jim Bauer, Vice President of ARRIS Investor
Relations. Bob Stanzione, ARRIS Chairman and CEO, Eric Cooney,
TANDBERG Television President and CEO, and Dave Potts, ARRIS EVP
and CFO will participate. A replay of the call and webcast will
also be made available for a period of 12 months following the
conference call on the ARRIS website at http://www.arrisi.com/.
About ARRIS ARRIS provides broadband local access networks with
innovative high-speed data and telephony systems for the delivery
of voice, video and data to the home and business. ARRIS' complete
solutions enhance the reliability and value of converged services
from the network to the subscriber. Headquartered in Suwanee,
Georgia, USA, ARRIS has design, engineering, distribution, service
and sales office locations throughout the world. For more
information, please visit http://www.arrisi.com/. About TANDBERG
Television Whether it's advanced compression systems, on-demand or
interactive television, TANDBERG Television (TAT.OL) delivers the
technology and expertise that is moving digital video forward. The
company's award-winning solutions are used by the world's leading
network operators, broadcasters and content owners to deliver new
viewer experiences and advertising opportunities. With a broad
suite of open, standards-based products, TANDBERG Television offers
the highest quality digital TV solutions including IPTV, HDTV,
video-on-demand, advertising on-demand, and interactive TV
applications to customers in the Americas, Asia Pacific, Europe,
Middle East and Africa. For more information, please visit
http://www.tandbergtv.com/. Forward-looking Statements This press
release contains forward-looking statements which are subject to
safe harbors created under the U.S. federal securities laws. These
statements include, among others, statements concerning projections
of revenues, income and other financial items; plans for future
products; growth in the cable equipment market; and growth in
demand for high speed access including cable telephony for ARRIS
Group Inc, and statements regarding the financial performance of
ARRIS following completion of the TANDBERG Television acquisition,
its ability to drive the strategic benefits outlined and the
timeframe during which the acquisition is expected to close.
Statements regarding future events are based on the parties'
current expectations. Actual results may differ materially from
those contained in any forward- looking statement. Specific factors
which could cause such material differences include, among other
things, successful outcome of the offer process for the TANDBERG
Television shares, regulatory approval of the acquisition, the
potential impact on the business of TANDBERG Television due to
uncertainty about the acquisition, the retention of employees of
TANDBERG Television and the ability of ARRIS to successfully
integrate TANDBERG Television's opportunities, technology,
personnel and operations. All financials for TANDBERG Television
are based on IFRS standards. A US GAAP reconciliation is not
available at this time. The statements in this presentation that
use such words as "believe," "expect," "intend," "anticipate,"
"contemplate," "estimate," or "plan," or similar expressions are
also forward-looking statements. The above listing of factors is
representative and is not intended as an all-encompassing list of
such factors. We disclaim any obligation to update forward-looking
statements, whether as a result of new information, future events
or otherwise. Additional Information and where to find it ARRIS
intends to file an offering memorandum in connection with the
proposed acquisition of TANDBERG Television by ARRIS pursuant to
the terms of the Transaction Agreement by and between ARRIS and
TANDBERG Television. The offering memorandum will be mailed to the
stockholders of TANDBERG Television and the security holders of
ARRIS and TANDBERG Television are urged to read the offering
memorandum and other relevant materials when they become available
because they will contain important information about the offer,
ARRIS and TANDBERG Television. Investors and security holders may
view copies of these documents (when they are available) and other
documents filed with the Oslo stock exchange by going to the ARRIS'
Investor Relations page on its corporate web site at
http://www.arrisi.com/. Income Statement Highlights & Cash from
Operating Activities ARRIS (US GAAP) TANDBERG TV (IFRS) 2005
2006-9Mos. 2005 2006-9Mos. US$-M (1) US$-M (1) NOK-M (1) US$-M (3)
US$-M (1)(2) Sales $680.4 $657.0 1,868.7 $290.0 $265.0 Gross Margin
$190.7 $183.4 1,051.6 $163.4 $153.6 % Margin 28.0% 27.9% 56.3%
56.3% 58.0% Operating Income $53.7 $67.5 349.0 $54.2 $44.8 % Margin
7.9% 10.3% 18.7% 18.7% 16.9% Cash from Operating Activities $25.5
$77.2 281.2 $43.6 $36.9 1 As reported 2 TANDBERG began reporting in
US$ in 2006 3 NOK/US$ translation based on 6.44 NOK/US$ exchange
rate Balance Sheet Highlights & Cash from Operating Activities
ARRIS (US GAAP) TANDBERG TV (IFRS) (1) ($M) 12/31/2005 (1)
9/30/2006 12/31/2005 9/30/2006 Cash, Cash Equiv & Short Term
Investments $129.5 $478.7 (2) $75.1 $124.4 Net Working Capital (3)
$263.1 $617.4 (2) $124.3 $190.2 Debt $0.0 $276.0 (2) $0.0 $0.0 Cash
(Net Debt) (4) $129.5 $202.7 (2) $75.1 $124.4 1 As reported 2
Includes the impact of the November 2006 $276M convertible Note
Offering net of offering expenses 3 Defined as Current Assets minus
Current Liabilities 4 Defined as Cash and Cash Equivalents and
Short Term Investments minus Debt DATASOURCE: ARRIS Group, Inc.
CONTACT: Media Relations, Alex Swan, +1-678-473-8327, or , or
Investor Relations, Jim Bauer, +1-678-473-2647, or , both of ARRIS;
or Media Relations, Gay Bell, +44-208-964-9149, or , for TANDBERG
Television; or Investor Relations, Fraser Park of TANDBERG
Television, +44-238-048-4140, or Web site: http://www.arrisi.com/
http://www.tandbergtv.com/
http://www.arrisi.com/investor_relations/conf_call
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