ANTEC Corporation Announces Completion of LANcity Acquisition with Significant Gain

Strategic Insights -

ANTEC Corporation has completed the acquisition of the Broadband Technology Division of Nortel Networks (previously LANcity) in a joint venture with Arris Interactive, LLC. This strategic move combines LANcity's expertise in data and Internet access products with Arris Interactive's capabilities in cable telephony, positioning Arris as the world leader in digital voice, data, and Internet access over hybrid fiber coax (HFC) networks.

Key Takeaways:

  • The combination of LANcity's data and Internet access product portfolio with Arris Cornerstone cable telephony products positions Arris as the world leader in digital voice, data, and Internet access over HFC networks.
  • The new product, Packet Port(R), enables cable operators to provide field-hardened, low-power, carrier-class telephone service combined with data over cable interface standard (DOCSIS) compliant data in a single outdoor or indoor configuration.
  • ANTEC will be the exclusive distributor of LANcity products to domestic cable operators, with estimated sales to domestic cable operators sold through its sales channels during the 18-month period approximating $150 million.
  • The LANcity transaction will enable ANTEC to enter the exciting and fast-growing cable modem business, with LANcity holding a reported market share of approximately 30% and being one of the leading architects of the DOCSIS I modem standard.
  • The combination of products and talent into one organization furthers Nortel Networks' commitment to the market and recognizes the new Arris Interactive as a key part of Nortel Networks' packet and Internet protocol strategy.

Statistics:

  • The transaction will be accounted for as a gain on the sale of the 6.25% interest, resulting in a pre-tax gain of approximately $60 million.
  • The gain translates to $0.79 per share after tax on a diluted basis.
  • LANcity holds a reported market share of approximately 30% in the cable modem market.
  • Sales to domestic cable operators sold through ANTEC's sales channels during the 18-month period are estimated to approximate $150 million.
  • The number of homes worldwide that Cornerstone, a product from Arris Interactive, has been accessible to is nearly two million, with lines in service increasing over 300% in 1998 to over 100,000 lines in service.

Sources:

  • PR Newswire press release, "ANTEC Corporation Provides Details on Completion of LANcity Acquisition," dated April 13, 1999.
  • Nortel Networks (NYSE: NT) and ANTEC Corporation (Nasdaq: ANTC) press release, "Nortel Networks and ANTEC Complete LANcity Acquisition," dated April 13, 1999.