CommScope Bought Out for Half Off

Shares of CommScope are much higher today on the news that it’s being bought out by Carlyle Group for $3.9 billion. The price tag comes to $31.50 per share which is a 36% premium to yesterday’s close.

CommScope is working to revive sales after the global recession hurt demand last year. Carlyle is banking on an increase in demand for fiber-optic networks as phone- and Internet-service providers update their systems to accommodate increasing amounts of video and data.

CommScope, which sells its products worldwide, said revenue this quarter will be $730 million to $780 million, missing the $805.9 million predicted by analysts in a Bloomberg survey. The company has raised prices as its costs have increased, cutting into sales, Chief Financial Officer Jearld Leonhardt said in a separate statement. Sales a year earlier were $748.5 million.

The buyout is the good news. The bad news is that even after a 36% premium, CommScope is still going for half its 2007 high. It’s even well below where it was in 1999 and 2000.

Sure, many stocks are in the same boat, but I think it’s important to put a 36% premium into some context.

Posted by on October 27th, 2010 at 10:40 am


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