Video compression and cable infrastructure supplier Harmonic Inc. has struck a deal to acquire competitor Scopus Video Networks Limited for roughly $51 million in cash.
Under the definitive agreement, which has been approved by both companies’ boards, Sunnyvale, Calif.-based Harmonic will pay $5.62 in cash for each outstanding share of Tel Aviv, Israel-based Scopus, representing an enterprise value of approximately $51 million, net of Scopus’ cash and short-term investments.
The proposed acquisition, which is subject to customary conditions, regulatory approvals and the approval of Scopus’ shareholders, is expected to close in the latter part of the first quarter of 2009. Harmonic has received voting agreements supporting the proposed acquisition from shareholders representing approximately 50% of Scopus’ outstanding shares.
“This acquisition extends Harmonic’s diversification strategy, providing us with an expanded international sales force and customer base, particularly in video broadcast, contribution and distribution markets, as well as complementary video processing technology and expanded research and development capability,” said Harmonic president and CEO Patrick Harshman in a statement. “Like Harmonic, Scopus has strong gross margins and a proven track record of innovation and growth. By combining our two companies, we see significant opportunities for product, sales and cost synergies.”
After fully integrating Scopus’ business, Harmonic says it expects to realize cost synergies of $8-10 million per year. That will make the transaction accretive to Harmonic’s non-GAAP earnings in 2009, exclusive of the amortization of intangibles and non-recurring charges such as restructuring and transaction costs. Harmonic says it will determine the appropriate purchase accounting for the transaction at closing and, accordingly, “cannot reasonably estimate the impact on GAAP earnings at this time.”
For the first nine months of 2008, Scopus reported revenues of $55.4 million, an increase of 35% over the comparable period in 2007, with 79% of these revenues coming from outside the United States. No single customer represents more than 10% of Scopus’ total revenues. The company has approximately 300 employees worldwide.
“The combination of Harmonic and Scopus will further extend Harmonic’s video delivery leadership,” said Yaron Simler, Chief Executive Officer of Scopus, in a statement. “Harmonic brings its powerful customer relationships, brand reputation, technology leadership and financial resources. Scopus brings its highly skilled employees, proven distribution channels, strong customer relationships and sales momentum in emerging international markets. Scopus’ exciting new video products, including our next generation integrated receiver processor (IRP) platform, are a great fit with Harmonic’s portfolio of industry-leading products and solutions.”