ARRIS buys BigBand Networks

Broadband technology specialist ARRIS Group and digital video networking solutions provider BigBand Networks have entered into a definitive agreement whereby ARRIS will acquire BigBand Networks for a purchase price of $2.24 per share in cash. This equates to a diluted equity value of approximately $172 million, or $53 million net of estimated BigBand cash on hand.

ARRIS sees the acquisition as further extending its capabilities in the processing, management and distribution of digital video content and suggests it represents an important acquisition of innovative technologies and significant R&D investments that are expected to accelerate time-to-market and increase opportunities for ARRIS in several fast growing product areas.

These include the Converged Cable Access Platform (CCAP) architecture defined by CableLabs, Local and Targeted Advertising, IP Video Distribution, and Advanced Video Processing and Compression. BigBand’s valuable patent portfolio, coupled with their expertise in digital video networking will enhance ARRIS’ technological leadership as service providers move to an all-IP Converged Network Architecture.

Upon closing, ARRIS anticipates rapidly optimising BigBand’s financial performance through meaningful operating synergies such as the elimination of public company costs and the alignment of sales, marketing, and R&D initiatives. ARRIS also anticipates that the transaction will be neutral to accretive on a non-GAAP basis for ARRIS shareholders by mid-2012 and will offer upside potential thereafter by addressing upcoming video network evolution opportunities with a more complete offering.

“We are both enthusiastic and optimistic about the BigBand acquisition because it builds on our stated business strategy of growing our current businesses into a more complete portfolio including a strong video product suite and investing in the evolution towards network convergence onto an all IP platform,” said Bob Stanzione, ARRIS Chairman and CEO. “In addition, the acquisition offers new opportunities to expand our customer base worldwide. We are delighted to welcome the BigBand employees to ARRIS.”

“The BigBand team is proud of its accomplishments over the last twelve years in developing innovative products that enable the transmission of digital television to consumers around the world,” said Amir Bassan-Eskenazi, BigBand President and CEO. “We are excited to see this legacy live on and generate broader opportunities with continued innovation in media processing as part of the world-class product and service offerings provided by the ARRIS organisation.”

The acquisition will be conducted by means of a tender offer for all of the outstanding shares of BigBand, which is expected to commence within ten business days and will be subject to customary closing conditions, including the acquisition by ARRIS of a majority of BigBand’s shares and the receipt of antitrust clearance in the United States if applicable.

The board of directors of BigBand has unanimously recommended that the shareholders of BigBand accept the offer. Redpoint Ventures and ValueAct Capital Partners, holders of 32 per cent of the outstanding shares of BigBand, have agreed to tender their shares in the offer and to vote their shares in favour of the merger agreement and against any other transaction, subject to the provisions of the agreement. Completion of the transaction is expected to occur in late 2011.

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