- Buyers Guide
Ceragon Networks Ltd. has entered into a definitive agreement to acquire all of the outstanding shares of Nera Networks AS (NAS), headquartered in Bergen, Norway from Eltek ASA. The consideration for the acquisition is approximately $48.5 M on a cash-free/debt free basis. Both companies' assets and core competencies will be combined into a single integrated organization, product family and customer base.
NAS is a leading manufacturer of microwave radio systems and a leading expert in long distance microwave links. With over 60 years of RF and microwave solutions design NAS is also well known for its project management and turnkey project capabilities. The company has a global customer base, including several Tier 1 operators in Europe, Latin America and Africa.
The transaction accelerates Ceragon's strategic plans, as the combination of the two companies achieves immediate scale and reach to enable Ceragon to successfully and fully capitalize on global opportunities; NAS' strength in Latin America and Africa complements Ceragon's position in Europe, Asia and North America, and adds experienced, professional services staff and capabilities around the world.
The acquisition will be funded through a combination of cash on hand and approximately $35 M of bank debt. The transaction is expected to be accretive on a quarterly basis by the end of 2011. On an annual basis, the acquisition is expected to be dilutive in 2011 and substantially accretive in 2012. Once the integration has been completed and several additional quarters of operational improvements have been implemented, the company is targeting a combined operating model for 2012 with gross margins similar to Ceragon's current level, and operating profit of 10 percent based on a quarterly combined run rate revenue of about $150 M.
“This is a very important step for both our companies, and one which will allow us - together - to immediately become the premier microwave backhaul specialist at a crucial juncture for the industry,” said Ira Palti, President and CEO of Ceragon Networks. “We are in the early stages of a period of demand driven by continued subscriber growth in key regions and exponential increases in mobile data. During such a period, scale and reach are particularly important. This combination enables us to achieve both and allows for smooth integration due to the complementary nature of the two companies.”
Jorgen Larsen, CEO of Eltek ASA, added, “Eltek has evaluated several strategic alternatives for the future development of the microwave transmission activities in Nera Networks and we believe that a business combination of NAS with Ceragon, a leading wireless backhaul player, will provide the highest benefit to NAS' customer base."
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