Andrew Corp., a global leader in communications systems and products, has reached agreement for the sale of its satellite communications business to Resilience Capital Partners, a Cleveland, Ohio-based private equity firm.
Under the agreement, Andrew will receive up to $39 M in total potential cash consideration, in addition to an ownership stake in the new satellite communications company that Resilience will establish with the acquired Andrew assets. Andrew’s ownership stake will be from 17 percent to 20 percent depending on the newly-formed company’s capital structure at closing, which has not yet been finalized.
Andrew will receive $9 M in cash at closing, which is expected to occur prior to the end of calendar 2007, and $5 M in seller’s notes that will mature three years after closing. In addition, Andrew may receive up to an additional $25 M in cash after three years based upon the achievement of certain financial targets by the new company. Dependent upon the ownership stake received and the book value of the satellite communications assets at the date of closing, Andrew expects to record a charge against earnings of approximately $15 to $20 M related to the sale of this underperforming Andrew business.
“We believe the satellite communications business and its people will have a brighter future and greater prospects for success as a standalone company with a singular focus of meeting the needs of its worldwide customers,” said Jude Panetta, group president, satellite communications, Andrew Corp. “We worked extensively over the last two years to move away from unprofitable businesses and markets and, through innovative product development, to enter new and more profitable markets such as military satellite communications, electronics and mobile platforms. We are pleased with this agreement, and are optimistic that the satellite communications business will achieve its full potential as a standalone business under the guidance of Resilience Capital.”
”We at Resilience are confident that, when given the opportunity to be decoupled from Andrew, this business and its people will find itself to be an even more significant integrated systems supplier in its marketplace and to its customers,” said Bassem Mansour, managing partner, Resilience Capital Partners.
With sales of approximately $104 M in fiscal 2007, satellite communications comprises nearly five percent of Andrew’s overall revenues. The unit employs approximately 520 people in nine countries. Other than Reynosa, Mexico-based employees, who will be transitioned into other Andrew businesses over time, it is expected that all existing employees of satellite communications will transfer to or get offers to join the new company, named ASC Signal Corp., upon completion of the acquisition.