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Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Sabre
11/9/2018 | 1:49:06 PM
Raymond James reax
Among other reax to the deal, Raymond James analyst Simon Leopold has downgraded ARRS to Market Perform from Outperform ... He also noted that Q3 sales at Arris of $1.65B came a little under consensus of $1.71B and below the guidance range of $1.68B to $1.73B but met prior guidance of 65 cents to 70 cents GAAP EPS . 


He expects a weak first half of 2019 amid slower purchases by domestic customers with a "nice pick up" in the 2nd half of 2019. But Q4 2018 could be good as orders are pulled in before tariffs on Chinese goods bumps from 10% to 25% in 2019.

Like Piecyk, Leopold doesn't expect another bidder to swoop in for Arris, and said the $31.75 per share bid price is a bargain, given his prior target of $34. He also sees Arris shareholders giving it the okay, believing that they "would rather take the money than endure a tough 1H19." JB 
brooks7
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brooks7,
User Rank: Light Sabre
11/9/2018 | 8:55:48 AM
Re: Strange Math
 

It is all cash to existing shareholders.

The stock portion of the transaction was at least the $1B sold to Carlyle.

[In addition, The Carlyle Group, a global alternative asset manager, has reestablished an ownership position in CommScope through a $1 billion minority equity investment as part of CommScope's financing of the transaction.]

seven

 
Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Sabre
11/8/2018 | 11:40:09 PM
Re: Strange Math
Yes, Carlyle did take CommScope private in 2011, then re-IPO'd CommScope in 2013, and then "full exited" in late 2016. Direct from today's presentation deck: "CommScope was one of Carlyle's most successful investments ever" 
bosco_pcs
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bosco_pcs,
User Rank: Light Sabre
11/8/2018 | 8:36:28 PM
Re: Strange Math
Thanks... I sold my ARRS shares last month because of the tariff issue but at least I didn't lose any money. If it is cash, then its shareholders can take the money and run. I am very suspicious of the COMM side though. Didn't it come back public recently. This may very well be a version of PE shop's infamous rinse-spin-repeat deal. Careful out there!
Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Sabre
11/8/2018 | 7:16:59 PM
Re: Strange Math
It's an all-cash deal. Here's how CommScope outlines how it will cover its bases: 

-$900M in combined cash on hand expected at time of closing

-$6.3B of fully committed debt

-$1B of private equity convertable preferred from The Carlyle Group. 

On today's call, an analyst pressed CommScope on the leverage, which is expected to be 5.1x... CommScope's CTO CFO said that's within the company's historic leverage threshold levels and was confident that they'd be able to manage it at that level. Also expects that given the $1B per year of cash flow, that they'd be able to de-lever "quite quickly" to its target range of 2x-3x. JB 
bosco_pcs
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bosco_pcs,
User Rank: Light Sabre
11/8/2018 | 3:57:23 PM
Strange Math
When i checked half an hour ago (~3:30PM EST), Comm's market cap is ~$4.71B and Arris's ~$5.05B. At 1st glance, some press said $7.4B in cash/stock. But no details abt how much is cash and what portion is stock swap 

One angle may be Arris is trying to escape its PLC (Brexit) situation, especially when offshore corporation is no longer advantageous tax-wise

 


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