ARRIS’s $2.1 billion (€1.96bn) acquisition of Pace, which it had hoped to close in late 2015, may not occur until late December or the first quarter of 2016, according to the company.
In a statement providing an update on the status of the required merger-control clearances in connection with the pending Pace transaction, ARRIS says that ARRIS and Pace have received the required clearances from regulators in Germany, Portugal and South Africa and have received requests for additional information from the Antitrust Division of the US Department of Justice (the Antitrust Division), as well as regulators in Brazil and Colombia. The parties continue to work to respond to these additional requests. As a result of the continuation of the process, ARRIS now believes that the closing of the transaction will not occur until late December or the first quarter of 2016.
ARRIS continues to believe that it will be able to obtain the necessary clearances, although no assurance can be provided that all required approvals will be obtained. The Antitrust Division’s current focus appears to be on certain optical transmission products of ARRIS and Pace. It is possible that, as a condition to the approvals, the governmental agencies may impose requirements, conditions or limitations on ARRIS’s business after the completion of the transaction which may include a divestiture. Such requirements could further delay the completion of the transaction or reduce the anticipated benefits of the combination.
“While we are disappointed in the potential delay in the timing for completion, we believe that even if conditions are imposed, the transaction remains in the best interests of the shareholders,” commented Bob Stanzione, ARRIS Chairman and CEO. “Based on our current understanding of the Antitrust Division’s areas of continued focus and given the opportunities for the combined business and the potential synergies, we believe that the non-GAAP EPS accretion ranges for the first 12 months following the combination, previously estimated and disclosed by ARRIS, continue to remain possible.”
Allan Leighton, Chairman of Pace, commented: “Whilst the potential delay to the date of completion is disappointing, the Board of Pace believes that the strategic and economic rationale remains strong and reiterates its unanimous support for the combination. We continue to believe that the combination of the complementary ARRIS and Pace businesses will create a platform for future growth above and beyond our standalone potential.”