TE Connectivity sells broadband network business to CommScope

TE Connectivity has signed a deal to sell its Broadband Network Solutions (BNS) business unit to CommScope for $3bn. The BNS business, which consists of TE’s Telecommunications, Enterprise Networks and Wireless businesses, had revenue of $1.9 billion in fiscal year 2014. CommScope is a global provider of telecommunications infrastructure solutions for wireless, business enterprise and residential broadband networks.

“Our decision to sell our BNS business reflects our strategy to continue focusing on and expanding our leadership position in the attractive connectivity and sensor markets, with particular emphasis on harsh environment applications,” said Tom Lynch, TE Connectivity chairman and CEO.

“These markets represent a $165 billion opportunity for TE and have strong growth rates and attractive profit levels driven by the global trends of a safer, smarter, greener and more connected world.

“Earlier this fiscal year, we established TE as a leader in the high growth sensor market with two key acquisitions,” said Lynch. “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.

“We intend to use the majority of the proceeds from the sale for share repurchase,” said Lynch. “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.”

The transaction sharpens TE’s focus and enables the company to continue to expand its leadership position in the connector and sensor markets, where TE offers its customers the broadest range of products and solutions available. These markets represent a $165 billion opportunity for TE with attractive margins. As billions of devices, objects and people become part of the Internet of Things (IoT), TE technology is essential in sensing, connecting and transmitting the explosion of data that is being created. On completion of the transaction, 90% of TE’s revenue will be focused on providing customers with leading connectivity and sensor solutions.

TE’s products are critical to harsh environment applications requiring highly engineered solutions that perform in extreme conditions. On completion of the transaction, approximately 80% of TE’s revenue will be derived from harsh environment applications.

The BNS business, with sales in fiscal 2014 of $1.9 billion, is part of TE’s Network Solutions segment. The sale does not include TE’s Subsea Communications or Data Communications businesses, which also report into TE’s Network Solutions segment. The transaction is expected to close by 31 December 2015 and is subject to customary closing conditions and regulatory approvals.