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User Rank: Light Sabre
11/12/2018 | 12:04:28 PM
Re: Wot?
Seems like the $1b from Carlyle could decrease the debt, non? The CG has positioned COMM for this deal, but the execs in Hickory have a history of thinking big. If they hadn't bought Andrew 11 years ago ($2.6b) I can't see this ever having happened.  
User Rank: Light Sabre
11/10/2018 | 11:35:41 AM
Re: Wot?

Arris was trading over 40 P/E (way over).  The business is not a high growth business that one would expect such a multiple on.  And then CommScope paid a premium?  Seems like an awful deal to me.

Let's put it this way.  The deal should require $7.4B of profit to be generated out of this deal.  That will be a LONG time.

Finally, there is this weirdness about the way they talk about debt.  When you acquire a company, you acquire the debt.  The only way NOT to acquire the debt is to do an asset deal.  I wonder if the conversation started as an asset deal.



Jeff Baumgartner
Jeff Baumgartner,
User Rank: Light Sabre
11/9/2018 | 8:07:36 PM
Re: Wot?
I'm curious to know what specific reasons they gave, but, yeah, it is noted that analysts went into downgrade mode in the wake of the deal. 

One of the issues is that both companies haven't been cueing up the Styx lately  -- CommScope has been struggling and Arris is also facing some headwinds -- video STB biz is rough and some might not believe that their newer enterprise and wireless businesses can bridge the gap fast enough.  Both are also pressured by the tariffs, though Arris seems to be more at risk from that disruptive force. 

I think there's a worry that one plus one will be less than two, and there's the net leverage ratio that CommScope will take on, even though they believe they can lower it pretty quickly because the combo is expected to pump out $1B in cash flow from ops. 

I'm not surprised that there are some naysayers and some knee-jerk analysis coming out of this. CommScArris will have to prove this out soon enough.

But at the same time I also find it hard to believe that a bunch of smart people at both companies did the work and the analysis and said: "Well, shit. This will never work. Let's do it!" JB 
User Rank: Blogger
11/9/2018 | 6:46:47 PM
Investment types I talked to yesterday thought this was a terrible deal. What's that about?

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