AUSTIN,
Texas, May 9, 2023 /PRNewswire/ -- Aviat
Networks, Inc. ("Aviat") (Nasdaq: AVNW), the leading expert
in wireless transport and access solutions, today announced that
they have entered into a definitive agreement with NEC Corporation
(NEC; TSE: 6701), a leader in the integration of IT and network
technologies, for the sale of its Wireless Transport Business to
Aviat in an asset purchase transaction valued at $70.0 million U.S. dollars in cash and
shares.
"The transaction advances Aviat's strategic goal to create the
leading wireless transport specialist and to add meaningful scale
to our business," said Pete Smith,
CEO of Aviat Networks. "NEC's wireless transport solutions
brand, PASOLINK, is recognized by customers around the world for
its leading quality and reliability. The addition of NEC's wireless
transport business to Aviat's portfolio of high-power, mission
critical radios, all-outdoor microwave and multi-band radios,
advanced microwave routers and software offerings will create a
compelling solution set for any customer. Aviat and NEC possess
highly complementary customers and markets and the combination will
enable Aviat to pursue select new Tier 1 business. The increased
scale and capabilities will enable Aviat to compete even more
effectively against the large generalists and fiber backhaul
providers."
This acquisition will bring three immediate and significant
benefits for Aviat, our combined customers and our
shareholders:
- Improvement to scale. Aviat anticipates an additional
$150 million in revenue which will be
accretive to adjusted EBITDA, non-GAAP EPS, and free cash flow by
the end of the first year and we anticipate getting the acquired
business to 11-13% EBITDA by the end of year two. Complimentary
businesses and learnings from the 2019 channel partnership with NEC
in North America will result in
cost synergies that will pay for the acquisition. With little
overlap in product offering and very few common accounts, we expect
sales synergy opportunities in both Aviat and NEC customers, which
represent upside not factored into our financial model;
- Enhanced product portfolio with greater capability to innovate.
The combined product and Intellectual Property (IP) portfolios will
boost innovation and create a broader technology set to
significantly increase the reach of Aviat's global business. Aviat
will have additional scale to extend its leadership in innovation
by utilizing the product roadmap and next-generation initiatives
from the two companies; and
- A more diversified business. The combined business would
service over 20 Tier 1 service providers worldwide and be a leader
in private networks. With over 3 million PASOLINK unit
shipments worldwide, Aviat's business will have increased exposure
to global 5G spend and private network opportunities that will
further diversify Aviat's business into fast-growing international
markets with significant growth opportunities.
"As a leader in the field of wireless transport, NEC has
accumulated many years of advanced technologies and knowledge by
providing solutions to a wide range of customers around the world,"
said Takayuki Morita, President and
CEO, NEC Corporation. "Today, we are confident that this business
integration with Aviat will enable customers to be provided with
even more valuable solutions."
Aviat and NEC have a history of collaborating. In 2019, the two
companies entered into an agreement for Aviat to serve as the
channel partner for NEC in North
America. "The transaction announced today builds off the
relationship established between Aviat and NEC in 2019 and is proof
that Aviat is capable of executing a seamless transition for NEC
customers and employees," continued Mr. Smith. "We are eager to
bring our best-in-class services and operations to NEC customers
worldwide and implement the Aviat Operating Model to drive
continuous improvement."
Both sides are committed to providing customers with a smooth
transition period without service disruption and with the ultimate
goal of a better customer experience as a result of the
transaction.
The transaction has been approved by the board of directors of
both companies and is subject to customary closing conditions,
including regulatory approvals. Aviat expects the deal to close in
the third calendar quarter of 2023. The deal consideration is
$45.0 million in cash and
$25.0 million in Aviat stock. Aviat
expects to fully fund the cash portion of the acquisition from
committed debt financing. Aviat will appoint a board member
designated by NEC to Aviat's board of directors, helping to ensure
the success of the transaction.
Conference Call Details
Aviat Networks will host a conference call with analysts today,
May 9, 2023, at 8:30am ET. Interested parties may access the
conference call live via the webcast through Aviat Network's
investor relations website at
https://investors.aviatnetworks.com/events-and-presentations/events,
or may participate via telephone by registering using this online
form. Once registered, telephone participants will receive the
dial-in number along with a unique PIN number that must be used to
access the call. Accompanying slides will be available on the
Company's investor relations website. A replay of the conference
call webcast will also be available on the investor relations
website.
About Aviat Networks
Aviat Networks, Inc. is the leading expert in wireless
transport solutions and works to provide dependable products,
services and support to its customers. With more than one million
systems sold in 170 countries worldwide, communications service
providers and private network operators including state/local
government, utility, federal government and defense organizations
trust Aviat with their critical applications. Coupled with a long
history of microwave innovations, Aviat provides a comprehensive
suite of localized professional and support services enabling
customers to simplify both their networks and their lives. For more
than 70 years, the experts at Aviat have delivered high-performance
products, simplified operations, and the best overall customer
experience. Aviat is headquartered in Austin, Texas.
For more information, visit www.aviatnetworks.com or connect
with Aviat on Twitter, Facebook and
LinkedIn.
About NEC
NEC Corporation has established itself as a leader in the
integration of IT and network technologies while promoting the
brand statement of "Orchestrating a brighter world." NEC enables
businesses and communities to adapt to rapid changes taking place
in both society and the market as it provides for the social values
of safety, security, fairness and efficiency to promote a more
sustainable world where everyone has the chance to reach their full
potential. For more information, visit NEC
at https://www.nec.com.
Forward Looking Statements
The information contained in this document includes
forward-looking statements within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995, including Aviat's beliefs and expectations regarding business
conditions, new product solutions, customer positioning, revenue,
future orders, bookings, new contracts, cost structure, operating
income, profitability in fiscal 2023, process improvements,
realignment plans and review of strategic alternatives. All
statements, trend analyses and other information contained herein
regarding the foregoing beliefs and expectations, as well as about
the markets for the services and products of Aviat and trends in
revenue, and other statements identified by the use of
forward-looking terminology, including "anticipate," "believe,"
"plan," "estimate," "expect," "goal," "will," "see," "continue,"
"delivering," "view," and "intend," or the negative of these terms
or other similar expressions, constitute forward-looking
statements. Forward-looking statements are neither historical facts
nor assurances of future performance. Instead, forward-looking
statements are based on estimates reflecting the current beliefs,
expectations and assumptions of the senior management of Aviat
regarding the future of its business, future plans and strategies,
projections, anticipated events and trends, the economy and other
future conditions. Such forward-looking statements involve a number
of risks and uncertainties that could cause actual results to
differ materially from those suggested by the forward-looking
statements. Forward-looking statements should therefore be
considered in light of various important factors, including those
set forth in this document. Therefore, you should not rely on any
of these forward-looking statements.
Important factors that could cause actual results to differ
materially from estimates or projections contained in the
forward-looking statements include the following: the impact of
COVID-19; disruptions relating to the ongoing conflict between
Russia and Ukraine; continued price and margin erosion in
the microwave transmission industry; the impact of the volume,
timing, and customer, product, and geographic mix of our product
orders; the timing of our receipt of payment; our ability to meet
product development dates or cost reductions of products; our
suppliers' inability to perform and deliver on time, component
shortages, or other supply chain constraints; the effects of
inflation; the ability of our subcontractors to timely perform;
weakness in the global economy affecting customer spending;
retention of our key personnel; our failure to protect our
intellectual property rights or defend against intellectual
property infringement claims; the results of our restructuring
efforts; the ability to preserve and use our net operating loss
carryforwards; the effects of currency and interest rate risks; the
effects of current and future government regulations; general
economic conditions, including uncertainty regarding the timing,
pace and extent of an economic recovery in the United States and other countries where we
conduct business; the conduct of unethical business practices in
developing countries; the impact of political turmoil in countries
where we have significant business; our ability to realize the
anticipated benefits of any proposed or recent acquisitions; the
impact of tariffs, the adoption of trade restrictions affecting our
products or suppliers, a United
States withdrawal from or significant renegotiation of trade
agreements, the occurrence of trade wars, the closing of border
crossings, and other changes in trade regulations or
relationships.
For more information regarding the risks and uncertainties for
Aviat's business, see "Risk Factors" in Aviat's Form 10-K filed
with the U.S. Securities and Exchange Commission ("SEC") on
September 14, 2022, as well as other
reports filed by Aviat with the SEC from time to time. Aviat
undertakes no obligation to update publicly any forward-looking
statement, whether written or oral, for any reason, except as
required by law, even as new information becomes available or other
events occur in the future.
For Further Information:
Aviat Investor
Relations Contact:
Andrew Fredrickson
Director, Corporate Development & Investor Relations
Phone: (408) 501-6214
Email: andrew.fredrickson@aviatnet.com
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SOURCE Aviat Networks, Inc.