Portugal Gives OK to Arris-Pace Combo

Thursday, Oct 01, 2015

The proposed $2.1 billion merger of Arris and Pace plc took another step forward following unconditional clearance from the Portuguese Competition Authority, Arris announced Tuesday.

That follows earlier pre-conditional clearance in Germany and South Africa. Arris said it has obtained clearance in response to three of its six antitrust-related filings in connection with the proposed combination.

Of recent note, Arris and Pace each received requests for additional info from the U.S. Department of Justice in connection to the deal, which aims to create a larger scale provider of set-tops and gateways, broadband access network gear and software products.

Pace and Arris hope to close the deal by year-end.

Upcoming milestones include an Arris vote on October 21 and a Pace vote on October 22, Raymond James analyst Simon Leopold said in a recent research note.

Earlier this month, Leopold maintained his “Strong Buy” rating on shares of Arris even as Pace provided 2015 revenue guidance of $2.55 billion, down from an earlier forecast of $2.65 billion to $2.72 billion due to spending delays driven in part by cable operator consolidation.

“Despite the lower sales forecast from Pace, we believe the acquisition still holds significant upside, highlighted by ARRIS' recent update that raised the guidance for EPS accretion to $0.65-0.75, an increase of $0.20 from its initial forecast ,” he wrote.

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