PRIVATE equity firm Carlyle Group is in talks to buy CommScope for about $3bn (£1.9bn), the communications cable maker said.
It is the latest sign of a resurgence of acquisitions by private equity firms, which are under pressure to invest billions of dollars of capital raised in the past few years.
Private equity takeovers – known as leveraged buyouts – plummeted after the credit crisis limited access to debt financing. But the financing markets have since improved enough for large deals to be struck again. In July, Carlyle announced a $3.8bn deal to buy US nutritional supplements maker NBTY.
Under the terms of a what CommScope called a “potential agreement,” Carlyle would buy CommScope for $31.50 per share in cash, a premium of 36 per cent to the shares’ Friday's closing price, CommScope said.
“We consider a deal price of $31.50 fair,” UBS analysts said in a research note. But they
added that their “own internal analysis had produced scenarios with a potential take-out value 5-10 per cent higher.”
The UBS analysts said they did not foresee any rival telecommunications companies or other logical strategic buyers emerging to counter Carlyle’s bid.
Corning, and possibly 3M and Huawei, would be the most likely strategic buyers that would consider a deal, the analysts said. But “we believe either price, size of deal, cultural and regulatory hurdles, would make it difficult to consummate any deal,” they wrote.
The deal values CommScope at $2.98bn, based on 94.72m shares outstanding as of 21 July.