Harris Corporation's Microwave Communications Division and Stratex Networks, Inc. To Merge
September 05 2006 - 5:04PM
PR Newswire (US)
Combination Creates Leading Global Wireless Transmission Networks
Solutions Provider MELBOURNE, Fla. and SAN JOSE, Calif., Sept. 5
/PRNewswire-FirstCall/ -- Harris Corporation (NYSE:HRS) and Stratex
Networks, Inc. (NASDAQ:STXN) today announced that they have signed
a definitive agreement under which Harris' Microwave Communications
Division and Stratex Networks will combine operations to form a new
company named Harris Stratex Networks, Inc. With combined annual
revenue of approximately $600 million, Harris Stratex Networks,
Inc. will be the largest independent provider of wireless
transmission network solutions and will have customers in over 150
countries. Under terms of the agreement, Harris Corporation will
contribute its Microwave Communications Division and $25 million of
cash in exchange for approximately 56 percent ownership of the
combined company. Stratex Networks shareholders will exchange their
existing stock on a tax-free basis for approximately 44 percent
ownership of the combined company. The transaction has been
approved by the Boards of Directors of both companies and is
expected to close in the next 3-4 months, subject to approval by
Stratex Networks shareholders, regulatory approvals, and other
customary closing conditions. It is expected that Harris Stratex
Networks will be listed on the NASDAQ Global Market and will have a
fiscal year ending June 30. "This transaction will create a leading
global communications solutions provider offering end-to-end
wireless transmission solutions for mobile and fixed-wireless
service providers and private networks. The new company's solutions
offering will be the broadest in the industry including transport
and access microwave radios, carrier-grade Ethernet transmission
systems, network management software, and turnkey field services
that include network planning, engineering and implementation,"
said Howard L. Lance, chairman, president and chief executive
officer of Harris Corporation. "The combination of these two
businesses brings together complementary global distribution
channels and product offerings with minimal existing customer
overlap, creating a much broader and more effective geographic
footprint. Both companies have a reputation for quality and
innovation as evidenced by two of the most technologically advanced
product families in the industry -- the Harris TRuepoint(TM) and
the Stratex Networks Eclipse(TM). These product lines will continue
to be supported and marketed by the new company. In addition,
technology integration will provide significant potential for
synergies and offer a unique value proposition for customers."
"Combining our businesses will create a powerful company in a
growing market. The combination also allows for significant
economies of scale, further opportunities for innovation, and an
unmatched set of solutions," said Charles D. Kissner, chairman of
Stratex Networks. "Investment in product development and sales and
marketing will be leveraged across a much larger customer base.
Leveraging the combined supply chain should significantly lower
product costs through joint manufacturing initiatives. The new
company will be a larger, more competitive, pure-play wireless
technology company capable of achieving stronger financial
performance than as two stand-alone companies. As a result, Harris
Stratex Networks will have the financial capacity to invest in new
technologies and adjacent wireless markets to fuel future growth.
Innovation has been key to the improved performance these companies
have achieved in the past few years, and we see this combination as
enhancing that capability even more, building on clear,
demonstrated momentum." The Eclipse licensing program initiated by
Stratex Networks in January 2006 will continue to be supported by a
dedicated organization within the new company. This organization
will ensure that business partners participating in licensing will
receive focused attention as the program continues to expand. Guy
Campbell, president of Harris' Microwave Communications Division,
will be appointed chief executive officer and lead a combined team
of executives from both companies. Thomas Waechter, chief executive
officer of Stratex Networks, will be appointed chief operating
officer, and Sally Dudash, vice president and controller of Harris'
Microwave Communications Division, will be appointed chief
financial officer. The legal headquarters of the new company will
be at the current headquarters site of the Harris Microwave
Communications Division in Research Triangle Park, North Carolina,
with headquarters functions both there and at the current site of
Stratex Networks headquarters in San Jose, California. The
nine-member Board of Directors of Harris Stratex Networks will
consist of a majority of independent directors, and will include
four current directors of Stratex Networks, including Charles
Kissner who will serve as non-executive chairman. Five of the
directors will be nominated by Harris and will include Guy Campbell
and Howard Lance. Harris Corporation will consolidate the results
of Harris Stratex Networks in its financial statements and reflect
minority interest for the portion of the company that it will not
own. The combination of the two businesses is projected to generate
approximately $35 million in annual pre-tax product cost and
expense synergies that are expected to be achieved in fiscal year
2008. The transaction is expected to be neutral to Harris
Corporation earnings per share in fiscal year 2007 and accretive by
approximately $.07 per diluted share in the fiscal year ending June
2008, excluding a one-time gain as a result of the transaction and
acquisition and integration expenses. The transaction is expected
to be slightly accretive to Stratex Networks earnings per share in
fiscal year 2007 and accretive by approximately $.08 per diluted
share in fiscal year 2008, excluding acquisition and integration
expenses. Conference call and webcast A joint conference call with
a presentation and discussion of this transaction will be held at 5
p.m. Eastern Time, September 5, 2006. The conference call will be
broadcast live via the Internet through the Harris Corporation
Investor Relations website at http://www.harris.com/announcement/
or the Stratex Networks Investor Relations website at
http://www.stratexnetworks.com/. Presentation materials for the
call will be available for viewing at both the Harris and Stratex
Networks Investor Relations websites. Those wishing to participate
in the conference call via the telephone may dial-in at
719-457-2633, access code: 2234294. The telephone replay will be
available from 8:00 p.m. Eastern Time on September 5, 2006 through
midnight, Eastern Time on Tuesday, September 12, 2006 by dialing
719-457-0820, access code: 2234294. The conference call replay will
also be available via webcast through the Harris Investor Relations
website at http://www.harris.com/announcement/ and the Stratex
Investor Relations website at http://www.stratexnetworks.com/.
About Stratex Networks Stratex Networks is one of the world's
leading providers of high-speed wireless transmission solutions.
Since it was founded in 1984, Stratex has achieved international
recognition for quality, innovation, and technical superiority in
delivering data, voice, and video communication systems, including
comprehensive service and support. Stratex, with its broad product
offering and worldwide sales and support organization, is
strategically positioned to serve its customers' needs in wireless
high-capacity transmission technology. About Harris Microwave
Communication Division The Microwave Communications Division is one
of four operating segments of Harris Corporation and is recognized
as a global leader in point-to-point microwave digital radio
communications, serving customers in more than 150 countries. It
has a singular focus on wireless transmission systems and delivers
complete wireless solutions and network and engineering services.
Microwave Communications provides solutions for global public and
private telecommunications network operators, public safety
operators, utility and transportation companies, government
agencies, and broadcasters. Microwave Communications has served the
wireless communications market for close to five decades. About
Harris Corporation Harris is an international communications and
information technology company serving government and commercial
markets in more than 150 countries. With headquarters in Melbourne,
Florida, the company has annual sales of $3.5 billion and nearly
14,000 employees -- including more than 6,000 engineers and
scientists -- dedicated to the development of best-in-class assured
communications(TM) products, systems, and services. The company's
operating divisions serve markets for government communications, RF
communications, broadcast communications, and microwave
communications. Cautionary Statement Regarding Forward-Looking
Statements Certain statements in this release constitute
"forward-looking statements." Forward-looking statements in this
release include, but are not limited to, the expected benefits and
costs of the transaction; the anticipated timing of completion of
the transaction; any projections of earnings, revenues, cost of
goods sold, expenses, synergy, accretion, margins or other
financial terms; any statements of plans, strategies, objectives,
market penetration, and any statements of expectation or belief.
Such statements are made in reliance upon the safe harbor
provisions of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Actual results could
differ materially from those projected or forecast in the
forward-looking statements. The factors that could cause actual
results to differ materially include the following: the possibility
that the parties may be unable to achieve expected synergies and
operating efficiencies in the proposed transaction within the
expected time-frames or at all; integration of the operations of
Harris' Microwave Communications Division with those of Stratex
Networks now may be more difficult, time- consuming or costly than
expected and may not be as successful as the parties anticipate;
revenues of the combined business following the transaction may be
lower than expected; operating costs, customer loss and business
disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or
suppliers) of the combined business may be greater than expected
following the transaction; the ability to retain key employees in
Harris' Microwave Communications Division and at Stratex Networks
subsequent to the completion of the transaction; the conditions to
the completion of the transaction may not be satisfied; regulatory
approvals that might be required for the transaction might not be
obtained on the terms expected and obtaining any such approvals or
any other necessary regulatory reviews may not occur on the
anticipated schedule; the parties' ability to meet expectations
regarding the timing, completion and accounting and tax treatments
of the transaction; Harris' Microwave Communications Division and
Stratex Networks are subject to intense competition; the failure of
either Harris' Microwave Communication Division or Stratex Networks
to protect its intellectual property rights may weaken the
competitive position of the combined company; in the future third
parties may assert claims, including intellectual property
infringement claims that could materially adversely affect the
operating results of the combined company; as well as other factors
discussed in "Risk Factors" under Item 1A. of Stratex Networks'
Annual Report on Form 10-K for the most recently ended fiscal year
and Stratex Networks' other filings with the SEC (which may also be
applicable to Harris' Microwave Communication Division), which are
available at http://www.sec.gov/. No person assumes any obligation
to update the information in this document, except as otherwise
required by law. Readers are cautioned not to place undue reliance
on these forward-looking statements that speak only as of the date
hereof. Additional information and where to find it This press
release is for informational purposes only. In connection with the
transaction, the parties will file a proxy statement/prospectus
with the Securities and Exchange Commission ("SEC"). This
communication may be deemed to be solicitation material in respect
of the proposed combination of Harris' Microwave Communications
Division with Stratex Networks. INVESTORS AND SECURITY HOLDERS ARE
URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE, INCLUDING THE PROXY STATEMENT/PROSPECTUS THAT
WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain the documents
free of charge at the SEC's web site, http://www.sec.gov/. Copies
of the proxy statement/prospectus and the filings with the SEC that
will be incorporated by reference in the proxy statement/prospectus
may also be obtained when available, without charge, by directing a
request to Stratex Networks, Inc., 120 Rose Orchard Way, San Jose,
CA 95134, Attention: Office of the Secretary, or to Harris
Corporation, 1025 West NASA Blvd., Melbourne, FL 32919, Attention:
Office of the Corporate Secretary. Participants in Solicitation
Stratex Networks, Harris and their respective directors and
executive officers and other persons may be deemed to be
participants in the solicitation of proxies from the Stratex
Networks stockholders in respect of the proposed transaction.
Information about the directors and executive officers of Stratex
Networks is set forth in the proxy statement for Stratex Networks'
2006 Annual Meeting of Stockholders, which was filed with the SEC
on July 10, 2006. Information about the directors and executive
officers of Harris is set forth in the proxy statement for Harris'
2005 Annual Meeting of Stockholders, which was filed with the SEC
on September 14, 2005. Investors may obtain additional information
regarding the interest of such participants by reading the proxy
statement/prospectus regarding the transaction when it becomes
available. DATASOURCE: Harris Corporation; Stratex Networks, Inc.
CONTACT: Media, Brent Dietz, +1-321-724-3554, or , or Investor
Relations, Pamela Padgett, +1-321-727-9383, or , both of Harris
Corporation; or Investor Relations, Mary McGowan of Summit IR Group
Inc., +1-408-404-5401, or , for Stratex Networks, Inc. Web site:
http://www.harris.com/ http://www.harris.com/announcement
http://www.stratexnetworks.com/
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