Arris To Buy Pace For $2.1 Billion In Cash And Stock

(RTTNews) - Arris Group Inc (ARRS), a provider of media entertainment and data communications solutions, on Wednesday said it has agreed to buy Pace plc (PIC.L) in a stock and cash deal valued at $2.1 billion (£1.4 billion).

Arris expects the deal to be accretive to its adjusted earnings by $0.45 to $0.55 per share in the first 12 months following close.

The deal will result in the formation of New Arris, which will be incorporated in the U.K., and its operational and worldwide headquarters will be in Suwanee, Georgia, USA.

New Arris is expected to be listed on the NASDAQ stock exchange under the ticker ARRS. In connection with the formation of New ARRIS each current share of Arris will be exchanged for one share in New Arris.

As per the terms of the deal, Pace shareholders will receive £1.325 of cash and a fixed exchange ratio of 0.1455 New Arris shares for each Pace share, reflecting aggregate consideration as of April 21 of £4.265 per share. The payment represents a 28% premium to the Pace closing share price as of April 21.

Arris said the cash portion of the deal would be funded through a combination of cash and debt. Arris has secured a fully committed facility from Bank of America Merrill Lynch to meet the funding requirements.

Pace shareholders will receive about 48.2 million shares of New Arris in aggregate. On a pro forma basis current Arris shareholders will hold 76% of New Arris and Pace shareholders will hold 24%.

The deal is expected to be taxable, for U.S. federal income tax purposes, to the shareholders of Arris.

Arris said the deal has been approved by the both companies' boards and is expected to close in late 2015, subject to customary closing conditions and approvals.

Arris Chairman and CEO Bob Stanzione will continue in that role in New ARRIS, and the then-current Arris board will serve as the New Arris board.

The combination would have pro forma revenues of $8 billion and would employ 8,500 employees.

"This transaction is another example of Arris's ongoing strategy of investing in the right opportunities to position our company for growth. Adding Pace's talent, products and diverse customer base will provide Arris with a large scale entry into the satellite segment, broaden our portfolio and expand our global presence," said Bob Stanzione.