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Aviat to buy NEC's wireless transport biz for $70M
Aviat Networks announced it will purchase NEC's wireless transport business, branded Pasolink, in a deal worth $70 million. #pressrelease
May 9, 2023
2 Min Read
AUSTIN, Texas – Aviat Networks, Inc. ("Aviat") (Nasdaq: AVNW), the leading expert in wireless transport and access solutions, today announced that they have entered into a definitive agreement with NEC Corporation (NEC; TSE: 6701), a leader in the integration of IT and network technologies, for the sale of its Wireless Transport Business to Aviat in an asset purchase transaction valued at $70.0 million U.S. dollars in cash and shares.
This acquisition will bring three immediate and significant benefits for Aviat, our combined customers and our shareholders:
Improvement to scale. Aviat anticipates an additional $150 million in revenue which will be accretive to adjusted EBITDA, non-GAAP EPS, and free cash flow by the end of the first year and we anticipate getting the acquired business to 11-13% EBITDA by the end of year two. Complimentary businesses and learnings from the 2019 channel partnership with NEC in North America will result in cost synergies that will pay for the acquisition. With little overlap in product offering and very few common accounts, we expect sales synergy opportunities in both Aviat and NEC customers, which represent upside not factored into our financial model;
Enhanced product portfolio with greater capability to innovate. The combined product and Intellectual Property (IP) portfolios will boost innovation and create a broader technology set to significantly increase the reach of Aviat's global business. Aviat will have additional scale to extend its leadership in innovation by utilizing the product roadmap and next-generation initiatives from the two companies; and
A more diversified business. The combined business would service over 20 Tier 1 service providers worldwide and be a leader in private networks. With over 3 million PASOLINK unit shipments worldwide, Aviat's business will have increased exposure to global 5G spend and private network opportunities that will further diversify Aviat's business into fast-growing international markets with significant growth opportunities.
Aviat and NEC have a history of collaborating. In 2019, the two companies entered into an agreement for Aviat to serve as the channel partner for NEC in North America.
Both sides are committed to providing customers with a smooth transition period without service disruption and with the ultimate goal of a better customer experience as a result of the transaction.
The transaction has been approved by the board of directors of both companies and is subject to customary closing conditions, including regulatory approvals. Aviat expects the deal to close in the third calendar quarter of 2023. The deal consideration is $45.0 million in cash and $25.0 million in Aviat stock. Aviat expects to fully fund the cash portion of the acquisition from committed debt financing. Aviat will appoint a board member designated by NEC to Aviat's board of directors, helping to ensure the success of the transaction.
Read the full press release here.
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