DoJ Requires CommScope Divestitures in Andrew Deal

CommScope and the U.S. Department of Justice announced a settlement Thursday in connection with CommScope’s proposed $2.6 billion takeover of Andrew Corp. that will require Andrew to divest its 30% interest in Andes Industries in order to proceed with the acquisition.

The Justice Department said the transaction, as originally proposed, would have “substantially lessened competition in the development, manufacture, and sale of drop cable,” which is coaxial cable used by cable operators. In addition, the agency said, it would have given CommScope the ability to appoint directors to the board of Andes, a substantial competitor, in violation of federal law.

“This settlement ensures continued competition in a key component necessary for the transmission of cable television, which is an important product for millions of consumers,” said Thomas O. Barnett, assistant attorney general in charge of the Justice Department’s Antitrust Division.

CommScope and a subsidiary of Andes, PCT International, are currently two of only four companies that provide drop cable to cable companies in the United States, according to the Justice Department, a market that comprises sales of approximately $500 million annually.

Under the proposed settlement, CommScope and Andrew must divest all of Andrew’s stock ownership and other interests in Andes. The settlement is subject to approval by the U.S. District Court for the District of Columbia.

In a statement, CommScope said the value of the “non-core assets” the Justice Department is requiring to be divested was less than $25 million as of Sept. 30. The company said it expects to close the transaction by year-end, subject to the satisfaction of other customary conditions.

CommScope also noted that the proposed Andrew transaction has been cleared by the European Commission as well as other required regulatory authorities. Andrew stockholders are scheduled to vote on the transaction on Dec. 10.