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Nortel in cable deal
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October 18, 2000: 3:56 p.m. ET
Network firm, ANTEC combine high-speed cable interests to form Arris
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NEW YORK (CNNfn) - Nortel Networks Corp. and cable equipment company ANTEC Corp. agreed Wednesday to combine their high-speed cable businesses, forming a new company to focus on bringing broadband services to local cable markets.
The new company will Arris Inc., and will comprise ANTEC and Arris Interactive -- currently a private joint venture between Nortel and ANTEC.
Nortel will transfer its 81.35 percent stake in Arris Interactive to the new holding company in return for 33 million shares of common stock in Arris Inc. and $325 million in cash. Nortel will own about 46.5 percent of the company and also get two seats on the board of the new company.
 ANTEC, which owns the rest of Arris Interactive, will become a subsidiary of the new company but take a leadership role.
"This transaction represents a 'hairpin turn' for ANTEC as we position ourselves to lead the charge to broadband," said Bob Stanzione, president and CEO of ANTEC, in a statement. "This transaction will simplify the relationship with our customers, give us the broadband local access technologies our customers require, and enable us to gain Nortel Networks as a major shareholder and global market ally."
"This is a big deal for ANTEC; it's kind of a minor event for Nortel," said Alex Henderson, an analyst at Salomon Smith Barney. "It does represent a change in structure, obviously, and a focusing on a space. I think it's probably a good move on both companies' parts."
Nortel said the transaction is expected to be neutral to its earnings in calendar 2001, excluding any one-time gains.
Arris Interactive was formed by Nortel and ANTEC in 1995, and now has 395 employees with revenue of $329 million in 1999.
The deal is expected to close in the first quarter of 2001 and a registration statement for the new company will, at some point, be filed with the Securities and Exchange Commission.
Shares of Duluth, Ga.-based ANTEC (ANTC: Research, Estimates) fell $7.75 to $12.19 in late afternoon trading on a tough day for tech stocks. The company had revenue of $827 million in 1999.
Shares of Nortel (NT: Research, Estimates), the world's No. 2 network equipment supplier, dropped $2.75 to $61.25. 
-- from staff and wire reports
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