US regulators probe £1.4bn Arris-Pace deal

Allan Leighton
Allan Leighton
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US regulators might impose conditions on the proposed £1.4bn merger between Pace and Arris, it was announced today.

Arris, based in the Deep South state of Georgia, is buying the Saltaire-based TV technology company to help reduce corporate taxes​ and ​expand its operations outside North America.​

It said today that the Antitrust Division of the US Department of Justice, as well as regulators in Brazil and Colombia, have requested more information on the deal.

Arris said the closing of the transaction, which already has clearances in Germany, Portugal and South Africa, will be delayed until late December or the first quarter of 2016.

It said: “Arris continues to believe that it will be able to obtain the necessary clearances, although no assurance can be provided that all required approvals will be obtained.

“The Antitrust Division’s current focus appears to be on certain optical transmission products of Arris and Pace.

“It is possible that, as a condition to the approvals, the governmental agencies may impose requirements, conditions or limitations on Arris’ business after the completion of the transaction which may include a divestiture.

“Such requirements could further delay the completion of the transaction or reduce the anticipated benefits of the combination.”

Bob Stanzione, chairman and CEO of Arris, said he was disappointed by the potential delay in the timing for completion.

He added: “We believe that even if conditions are imposed, the transaction remains in the best interests of the shareholders.

“Based on our current understanding of the Antitrust Division’s areas of continued focus and given the opportunities for the combined business and the potential synergies, we believe that the non-GAAP earning per share accretion ranges for the first 12 months following the combination, previously estimated and disclosed by Arris, continue to remain possible.”

Allan Leighton, chairman of Pace, added: “While the potential delay to the date of completion is disappointing, the board of Pace believes that the strategic and economic rationale remains strong and reiterates its unanimous support for the combination.

“We continue to believe that the combination of the complementary ARRIS and Pace businesses will create a platform for future growth above and beyond our standalone potential.”

Pace shares rose 1.3 per cent to 374.1 pence this morning.

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