Arris Completes BigBand Acquisition - Analyst Blog
November 22 2011 - 7:30AM
Zacks
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 Report
VERIZON COMM (VZ): Free Stock Analysis Report
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