Harmonic Inc., a well-known name in video delivery infrastructure has reached an agreement to sell its Cable Access business to Aurora Networks, Inc. for USD 46 million in cash. The transaction is subject to customary closing conditions and is expected to be completed by the end of the first quarter of 2013. In addition, consistent […]
Harmonic Inc., a well-known name in video delivery infrastructure has reached an agreement to sell its Cable Access business to Aurora Networks, Inc. for USD 46 million in cash. The transaction is subject to customary closing conditions and is expected to be completed by the end of the first quarter of 2013. In addition, consistent with ongoing efforts to review its capital structure and to deliver value to all its stockholders, Harmonics board of directors has approved an increase to its current share repurchase programme to include the net, after-tax cash proceeds from this transaction of approximately $35 million, contingent upon its closing.
“The sale of the Cable Access business enables us to sharpen our focus on our largest growth opportunities, said Patrick Harshman, President and Chief Executive Officer. Cable Access was Harmonics lowest margin product line, and through this transaction and the increase in our authorised share repurchase programme, we will continue to drive growth in our core markets, expand our gross margin, reduce our outstanding shares, and position our business for stronger long-term earnings.
The strategic decision to divest the Cable Access business reflects Harmonics commitment to the video production and playout, video processing, and cable edge product areas, where it currently holds market share leadership. In contrast, Harmonic is not the market leader in the Cable Access product area, and there is limited strategic synergy between Cable Access and the companys other higher growth product lines. The Cable Access portfolio includes optical transmitters, amplifiers, receivers and nodes. Given Harmonics longstanding relationship with its customers in the Cable Access business, Harmonic is very pleased to work with Aurora Networks because of its scale, strategic focus and commitment to customer care.
The Cable Access business generated $52.9 million of net revenue with gross margin of approximately 30 per cent in calendar year 2012. Harmonic expects that the sale of the business will be neutral to diluted earnings per share for 2013, excluding the impact of the share repurchase programme.
Results related to the Cable Access business will be recast for prior periods and reported as discontinued operations in the companys financial statements beginning with the first quarter ended March 29,
2013. The Company expects to recognise in discontinued operations an after-tax gain of approximately $12 million to $14 million related to the sale. The net, after-tax cash proceeds from the sale are expected to be approximately $35 million.