TE Connectivity has agreed to sell the bulk of its networks business to CommScope for US$3 billion, it announced on Wednesday.
The deal, which has been approved by both companies’ directors, will see CommScope take control of TE Connectivity’s telecom, enterprise and wireless operations.
The move will give CommScope access to adjacent markets, and give it greater geographic and business diversity, the company said, in a statement.
"This is an important and transformative acquisition for CommScope, bringing together complementary geographic and customer coverage, products and technologies," said CommScope president and CEO Eddie Edwards.
"This transaction has many clear strategic and financial benefits for all of our stakeholders," he added. "It creates enhanced scale with a combined, diversified portfolio that we believe is well-positioned to take advantage of opportunities in the marketplace."
The acquisition will help CommScope expand into wireline and fibre networks, where it sees an opportunity to address the growing demand for broadband in developed and emerging markets.
On completion of the deal the broadband connectivity business will account for 28% of CommScope’s sales, up from 13% today, while its wireless business will drop to 46% of sales from 65%.
The firm also expects to "meaningfully expand its footprint" as a result of TE Connectivity’s presence in Europe, the Middle East, Africa and Asia.
TE Connectivity, meanwhile, said the sale of its Broadband Network Solutions (BNS) business unit, which comprises its telecom, enterprise and wireless operations, will enable it to focus on the connector and sensor markets, particularly with regard to harsh environment applications.
"Earlier this fiscal year, we established TE as a leader in the high growth sensor market with two key acquisitions," said Lynch. In 2014 TE Connectivity bought Measurement Specialities and the Seacon group.
"These acquisitions, in conjunction with the sale of BNS, will result in approximately 90% of TE’s portfolio focused on providing leading connectivity and sensor solutions," he added.
"We intend to use the majority of the proceeds from the sale for share repurchase," Lynch said. "We also expect to increase organic investments to strengthen our unmatched range of connectivity and sensor solutions and make strategic acquisitions to further expand our customer offering."
