Comcast Corp. (CMCSA:US), the largest U.S. cable provider, agreed to pay $150 million for a stake in Arris Group Inc. (ARRS:US) to forge closer ties with a manufacturer of its set- top boxes and high-speed Internet equipment. Arris shares rose.
Comcast is acquiring 10.6 million Arris shares, according to a statement yesterday. The deal will be completed in conjunction with Arris’s $2.35 billion acquisition of Google Inc.’s Motorola Home Business, announced last month. Google and Comcast will each own about 7.85 percent of Arris’s outstanding common stock after the Motorola takeover is completed.
Comcast purchases Internet and voice equipment from Arris in addition to Motorola set-top boxes. The stake signals a commitment to Arris’s products from the Philadelphia-based company, Bob Stanzione, Arris’s chairman and chief executive officer, said in the statement.
“This investment by one of our largest customers is a strong indication of customer support for the Motorola Home acquisition and its potential to accelerate innovation to the benefit of the industry and consumers,” Stanzione said.
Arris, based in Suwanee, Georgia, rose 8 percent to $16.56 at the close in New York, the biggest gain since July 28, 2011. Comcast climbed 0.7 percent to $39.20.
After adding the Motorola business, Arris will have annual earnings per share of $2 to $2.15 and sales of $4.8 billion to $5.1 billion, Stanzione said today at an investor conference.
The issuance of the shares to Comcast is conditioned on the closing of the Motorola sale, the companies said. Arris expects that deal to close in the second quarter, Stanzione said today.
Qatalyst Partners LP is the lead financial adviser for Comcast on the Arris transaction. Evercore Partners Inc. (EVR:US) and Bank of America Corp.’s Merrill Lynch unit are advising Arris.
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