Harmonic reached an agreement to sell its Cable Access business to Aurora Networks for $46 million in cash, with Harmonic citing a decision to focus on its higher-margin video and cable edge product areas.
Harmonic’s Cable Access portfolio includes optical transmitters, amplifiers, receivers and nodes. According to Harmonic, the company is not the market leader in the Cable Access product area, and there is “limited strategic synergy between Cable Access and the company’s other higher-growth product lines.”
"The sale of the Cable Access business enables us to sharpen our focus on our largest growth opportunities,” Harmonic president and CEO Patrick Harshman said in a statement Monday. “Cable Access was Harmonic’s lowest-margin product line, and through this transaction and the increase in our authorized share repurchase program, we will continue to drive growth in our core markets, expand our gross margin, reduce our outstanding shares, and position our business for stronger long-term earnings.”
For Aurora, a provider of optical networking equipment to cable operators, “Acquiring the assets of Harmonic’s optical transport business extends our Access leadership position by adding to our footprint within the cable industry,” chairman, president and CEO Guy Sucharczuk said in a statement.
Sucharczuk continued, “We are dedicated to the evolution of cable infrastructure. This strategic move is an opportunity for us to further accelerate our innovations, continue to grow and ensure that the networks of current customers and expanded customer base from Harmonic can meet challenges today and well into the future.”
The transaction is subject to customary closing conditions and is expected to be completed by the end of the first quarter of 2013. Harmonic said it expects to recognize an after-tax gain of approximately $12 million to $14 million related to the deal. The net, after-tax cash proceeds from the sale are expected to be approximately $35 million.
For the 2012 calendar year, Harmonic’s Cable Access business generated $52.9 million of net revenue with gross margin of approximately 30%, according to the company. Harmonic expects that the sale of the business will be neutral to diluted earnings per share for 2013, excluding the impact of the share repurchase program.
