Harmonic to Acquire Divicom; Combination Creates Premier Provider of Open-Systems Solutions for Delivering Video, Voice and Data over Broadband Networks.SUNNYVALE, Calif.--(BUSINESS WIRE)--Oct. 27, 1999--
Harmonic Inc. (Nasdaq:HLIT) today announced that it has entered into a definitive agreement to acquire the Divicom business of C-Cube Microsystems (Nasdaq:CUBE). This combination will position Harmonic as a leading supplier of open-systems solutions for delivering video, voice and data over a variety of network architectures.
Based upon Harmonic's closing price of $64.875 on October 26, 1999, the value of the transaction would be approximately $1.7 billion. Under the terms of the agreement between Harmonic and C-Cube, the transaction will be structured as a tax-free exchange tax-free exchange
An exchange of assets between taxpayers in which any gain or loss is not recognized in the period during which the exchange takes place. Rather, taxpayers are required to adjust the basis of assets exchanged. of stock. C-Cube shareholders will receive 0.5427 shares of Harmonic stock for each share of C-Cube. Prior to closing, C-Cube will sell or spin out all of the assets and liabilities of its semiconductor division, after which Harmonic will acquire Divicom with a merger of C-Cube into Harmonic.
"Harmonic and Divicom are leading providers of open broadband solutions in our respective market spaces," said Anthony Ley LEY. This word is old French, a corruption of loi, and signifies law; for example, Termes de la Ley, Terms of the Law. In another, and an old technical sense, ley signifies an oath, or the oath with compurgators; as, il tend sa ley aiu pleyntiffe. Brit. c. 27. , Chairman, President and Chief Executive Officer of Harmonic. "We believe that the combination of our two companies is a major step forward for Harmonic, Divicom and our customers."
"Divicom's strengths in digital video compression Encoding digital video to take up less storage space and transmission bandwidth. See video codec and data compression.
video compression - Compression of sequences of images. and our strengths in cutting-edge fiber optics fiber optics, transmission of digitized messages or information by light pulses along hair-thin glass fibers. Each fiber is surrounded by a cladding having a high index of refractance so that the light is internally reflected and travels the length of the fiber is a logical and exciting combination," continued Ley. "Together, we can offer a more complete digital and optical solution for cable operators worldwide, as well as expand our penetration into telecommunications, satellite, wireless and other emerging markets for broadband communications."
Divicom is a leading developer of high-quality standards-based MPEG-2 encoding products and systems, and has emerged as the leading provider of open solutions for digital video. Headquartered in Milpitas, Calif., Divicom has approximately 425 employees and had revenues of $133.8 million and operating income Operating Income
The profit realized from a business' own operations.
This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $20.5 million for the nine months ended September 30, 1999.
"We see this as an ideal union," said Tom Lookabaugh, Divicom President. "Both organizations are technological innovators with common corporate cultures and a shared vision of open solutions for digital broadband communications. We are looking forward to joining the Harmonic team."
Combination Advances Harmonic's Broadband Solution Strategy
With its METROLink(TM) DWDM (Dense WDM) The term given to wavelength division multiplexing (WDM) when significantly more channels were being added. Since WDM is increasingly more "dense" all the time, both terms are used synonymously. See WDM.
DWDM - wavelength division multiplexing system, scalable nodes, TRANsend(TM) platform for local digital gateway applications, and CyberStream(TM) system for delivering high-speed data over broadband networks This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.
You can assist by [ editing it] now. , Harmonic's products enable a range of interactive services such as high-speed Internet See broadband. access, telephony and video-on-demand.
The move to combine forces with Divicom further advances Harmonic's strategic objective of providing flexible and efficient delivery of video, voice and data to a broad range of network operators.
"We are joining forces with Divicom to provide a standards-based product portfolio. This combination will allow two premier broadband equipment providers to pool resources to further advance the promise of video, voice and data over cable, telco, satellite and wireless networks," said Ley. "Going forward, we will leverage each other's technical and market expertise to develop new products, technologies and open-system solutions required to implement evolving network architectures."
In the near term, the combination increases Harmonic's role in the emergence of digital video services over cable, satellite, telco and wireless networks. Long term, the combination increases Harmonic's participation in video transmission over emerging IP networks.
Divicom's worldwide customer base includes BellSouth, CCTV CCTV
CCTV closed-circuit television , Cablevision Systems, Canal+, DirecTV, EchoStar Communications, ExpressVu, GTE GTE General Telephone & Electronics
GTE Génie Thermique et Énergie (French)
GTE Gas Turbine Engine
GTE Global Tropospheric Experiment
GTE Geothermal Energy
GTE Gas Turbine Efficiency plc (Sweden & USA) , LIN Television, MediaOne, NTL NTL Nevertheless
NTL National Transportation Library
NTL Norsk Tjenestemannslag
NTL National Training Laboratories
NTL Never Too Late
NTL Nothing to Lose
NTL National Training Laboratory
NTL None the Less
NTL Number Theory Library , Optus, Telefonica, Telenor, Telia, ONdigital, WGBH and US West.
"By combining resources, we will further enhance the top-tier support our customers have come to expect," said Lookabaugh. "With our joint talent pool and synergistic product lines, we will offer network operators turn-key, high-quality encoding and transmission solutions."
The merger is subject to the approval of the stockholders of each company, customary closing conditions, including applicable regulatory clearances, and the prior disposition of C-Cube's semiconductor business. The transaction will be accounted for as a purchase, and the resulting goodwill will be amortized over a period of approximately five years. Excluding goodwill charges, the combination is expected to be accretive to earnings per share in the first year. The closing is anticipated to take place in March 2000.
Divicom is a leading provider of open solutions for digital television. Products include audio/video encoding, data broadcast solutions, network management systems, consulting and integration services. Based on the MPEG-2, DVB (Digital Video Broadcasting) An international digital television (DTV) standard that is the European and Far Eastern counterpart of the North American ATSC standard. and ATSC (Advanced Television Systems Committee) An international digital television (DTV) standard adopted by the U.S., Canada, South Korea, Taiwan and Argentina. international standards, Divicom products enable digital video broadcasting over a variety of networks including satellite, wireless, fiber and cable. Divicom is a wholly-owned subsidiary of C-Cube (Nasdaq: CUBE), and is based in Milpitas, Calif. Divicom can be reached at +1.408.944.6700 or at http://www.divi.com.
C-Cube is the industry leader in the development and delivery of highly integrated digital video silicon and systems solutions. C-Cube's Semiconductor Division delivers highly integrated digital video silicon and systems solutions for the communications and consumer electronics markets, including digital set-top boxes, VCD See Video CD.
VCD - Video Compact Disc , and DVD DVD: see digital versatile disc.
in full digital video disc or digital versatile disc
Type of optical disc. The DVD represents the second generation of compact-disc (CD) technology. . C-Cube's Divicom Division is a leader in the deployment of digital video networks. C-Cube is headquartered in Milpitas, Calif. with offices in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe, and Asia. Its stock is traded on the Nasdaq under the symbol CUBE. C-Cube can be reached at +1.408.490.8000 or http://www.c-cube.com.
About Harmonic Inc.
Harmonic designs, manufactures and markets digital and fiber optic systems that deliver video, voice and data over cable, satellite, telco and wireless networks. These advanced solutions enable cable television and other network operators to provide a range of interactive broadband services that include high-speed Internet access, telephony and video-on-demand.
Harmonic is headquartered in Sunnyvale, Calif., where it also operates an R&D center and a manufacturing facility, and has a sales and support center in the U.K. The company also operates its Harmonic Data Systems subsidiary and an R&D center in Israel. In addition, the company maintains several sales and support centers worldwide. Harmonic is ISO (1) See ISO speed.
(2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 9001-certified and its stock is traded on the Nasdaq stock market Nasdaq stock market
The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. under the symbol "HLIT." For more information, check the company's website at www.harmonicinc.com.
This press release contains forward-looking statements, including, but not limited to, the anticipated closing date, the accounting and tax treatment of the transaction, and the potential benefits of the merger, including the expectation of offering a more complete digital and optical solution for cable operators and expanded penetration into other markets for broadband communications as well as other advancements to Harmonic's broadband solution strategy. These forward-looking statements involve a number of risks and uncertainties including, but not limited to, the failure of C-Cube to sell or spin out its semiconductor division, failure to obtain shareholder approval or regulatory consents, potential disruption of business arising from customer or employee uncertainty, the accounting and tax treatment of the merger transaction, the ability to successfully integrate the businesses of Harmonic and Divicom, and the failure to realize the potential benefits of the merger, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of the risk factors set forth in documents that Harmonic files with the SEC, specifically reports on Form 10-K Form 10-K
A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information.
See 10-K. and 10-Q.
Editor's Note Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat.
Trained by D. : Product and company names used here are trademarks or registered trademarks of their respective companies.