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Carlyle-backed CommScope to acquire Airvana – Deal Pipeline
September, 8 2015

Just days after closing its last deal, private equity-backed telecommunications company CommScope Holding Co. (COMM) has announced another acquisition.

The Hickory, N.C., company on Tuesday, Sept. 8, said it had agreed to acquire Airvana LP, a provider of 4G LTE and 3G small-cell wireless solutions, from a consortium of private equity firms and hedge funds. CommScope anticipated the transaction, which includes the purchase of substantially all of Airvana's assets, would close by Nov. 7.

Terms of the deal were not disclosed, but the purchaser, a Carlyle Group LP (CG) portfolio company, said it would fund the acquisition with cash on hand.

Airvana will operate within CommScope's wireless segment, retaining its headquarters in Chelmsford, Mass. Most of Airvana's employees there and at its additional development center in Bangalore, India, will join CommScope. Airvana president and CEO Richard Lowe and co-founder and chief technology officer Vedat Eyuboglu are among those joining CommScope.

Spun off from General Instrument Corp. in 1997, CommScope provides connectivity and infrastructure solutions for wireless, business enterprise and residential broadband networks. Its sector-specific services include data centers for U.S. federal agencies, fiber and copper cabling for oil and gas extraction, and wireless solutions for sports arenas.

The Airvana deal comes less than two weeks after the company completed a $3 billion cash purchase of the telecom, enterprise and wireless business of Swiss electronics company TE Connectivity Ltd.(TEL). The deal, announced Jan. 28, closed Aug. 28.

Carlyle took CommScope private on Jan. 13, 2011, in a $3.9 billion leveraged buyout. According to Securities and Exchange Commission filings, Carlyle invested $1.6 billion of equity.

CommScope subsequently made several add-on acquisitions, buying California LED lighting solutions and integrated sensor networks provider Redwood Systems Inc. on July 9, 2013, for about $59 million; Arizona open physical infrastructure management company iTracs Corp. for undisclosed terms on March 18, 2013; and Montreal's LiquidxStream Systems Inc. on June 2, 2011, for an undisclosed amount.

CommScope went public again on Oct. 25, 2013, with the company selling 30.8 million shares and Carlyle selling 7.7 million shares in the offering. The PE firm's stake dropped to 76% following the IPO from 98.4% before the offering.

In a secondary offering in March 2014, Carlyle sold 17.5 million CommScope shares, with underwriters purchasing nearly 2.63 million additional shares. In June 2014, Carlyle repeated the offering of 17.5 million shares, and in both March and June 2015 the firm sold 20 million shares, with underwriter options to purchase up to 3 million shares.

Carlyle retained a 32.2% stake in CommScope as of June 30, SEC filings show.

Former Motorola Inc. (MOT) executives Eyuboglu and Sanjeev Verma founded Airvana in 2000. The former has held his position as chief technology officer since the company's founding.

Airvana provides wireless phone and Internet solutions to public spaces, small businesses and individuals, as well as management systems and analytic metrics. The company is best known for its femtocell, or small cell, technology, which it began developing in 2006. Femtocells are small wireless transmitters that resemble Wi-Fi hotspots and can transmit calls inside homes and businesses.

The company, then known as Airvana Inc., went public in July 2007. On April 9, 2010, a consortium of private equity firms and hedge funds acquired the company through 72 Mobile Holdings LLC for $7.65 per share, or roughly $540 million. The group included GSO Capital Partners LPSAC Private Capital Group LLCSankaty Advisors LLC and ZelnickMedia LLC.

Following the deal, the company changed its name to Airvana Corp., with further changes to Airvana LLC in 2011 and to Airvana LP in 2013.

According to ZelnickMedia's website, Airvana remains a portfolio company of the media private equity firm. Airvana is also listed as a partially realized portfolio company of Siris Capital Group LLC, the successor to SAC Private Capital Group.

In September 2013, Airvana sold its evolution data-optimized, or EV-DO, wireless technology business to Swedish telecom company Telefonaktiebolaget LM Ericsson (ERIC). Financial terms of the deal, which was structured as a stock purchase, were not disclosed.

Airvana at one time had sold most of its EV-DO business through Nortel Networks Inc., and Ericsson in July 2009 paid about $1.13 billion for Nortel's wireless infrastructure business, inheriting the Airvana contract.

The 2013 sale to Ericsson resolved a $330 million lawsuit that Airvana filed against the company in February 2012 in the New York State Supreme Court. Airvana had alleged that Ericsson, which was contractually obligated to ship Airvana-designed network equipment with Airvana's software and pay royalties, instead was secretly collaborating with LG Electronics Inc. to produce an imitation product and bypass the royalty payments. Immediately following the Ericsson acquisition, both companies jointly sought dismissal of the lawsuit.

Robinson Bradshaw & Hinson PA is CommScope's legal adviser.

Pacific Crest Securities Inc. is acting as financial adviser to Airvana, while Sidley Austin LLP serves as its legal adviser.

CommScope and ZelnickMedia did not respond to requests for comment. Airvana and Siris could not be reached for comment.