12.06.2012 09:24 AM
After months of speculation, venture capital firm to buy Harris Communications for $225 million
The price includes $160 million in cash at closing, a $15 million subordinated promissory note and an earnout of up to $50 million based on future performance.
After months of speculation, Harris Corp. has announced the much-anticipated sale of its Broadcast Communications division—makers of RF transmitters, video servers, traffic and billing software and signal distribution products—to an affiliate of The Gores Group, LLC, a venture capital firm in Los Angeles, for $225 million. The price includes $160 million in cash at closing, a $15 million subordinated promissory note and an earnout of up to $50 million based on future performance.
The transaction, which is expected to be finalized early in 2013, will provide Harris Communications with the focus and investment capital it needs to remain competitive.
William M. Brown, president and chief executive officer of Harris, said the sale supports the company’s previously stated strategy to clean up its underperforming divisions and focus on its burgeoning military business. He said Harris plans to buy back up to $200 million of its shares after the deal closes.
“This is in addition to the $200 million of share repurchases already planned for fiscal 2013 and reflects our ongoing commitment to effectively deploy capital, including returning cash to shareholders,” he said.
Ryan Wald, Managing Director of The Gores Group, said that the deal gives The Gores Group “a proven technology leader with great products and a great team. We are excited to provide the capital and support to transition this division to a strong and independent company further enabling it to continue developing and delivering market leading technologies to its customers.”
While discussions are ongoing, Harris Morris, former president of Harris Communications, will continue to lead the division. Headquartered in Melbourne, Florida, the parent company said it receives approximately $5.5 billion in annual revenue and employees about 15,000 people, including 6,000 engineers and scientists.