In the first quarter that ended March 31, the CCS segment contributed $724.1 million to CommScope’s topline, accounting for 65% of CommScope’s total revenue.
Merger Monday this week is likely to kick off with a deal in the tech space, with electronics components maker Amphenol Corp. (APH) reportedly close to announcing an agreement to acquire the broadband connectivity and cable solutions (CCS) business of communication equipment maker CommScope (COMM).
In overnight trading, CommScope stock jumped 22%, while Amphenol stock edged down 0.30%.
A Wall Street Journal report, citing people familiar with the matter, stated that the rumored transaction, valued at approximately $10.5 billion, including debt, would be completed as early as Monday.
The Journal said big strategics and private-equity firms pursued CommScope’s CCS business. The company is scheduled to report its quarterly results on Thursday before the market opens.
In the first quarter that ended March 31, the CCS segment contributed $724.1 million to CommScope’s topline, accounting for 65% of the total revenue. The segment’s revenue grew 20% year over year (YoY).
The CCS business provides network access, cable headend, and passive optical network (PON) technologies to telecommunication companies, as well as cable companies, and offers data center connectivity for cloud/hyperscalers. It also brings gigabit broadband (cable, IPTV, OTT) to homes and businesses worldwide.
CommScope’s decision to offload its top revenue contributor may have been motivated by the need to reduce its heavy debt pile. At the end of the first quarter, the company’s balance sheet showed long-term debt of $7.25 billion, and its second-quarter interest expense was $173.7 million.
In early February, CommScope completed the divestment of its outdoor wireless networks and distributed antenna systems businesses to Amphenol in a deal valued at more than $2 billion.
The Journal stated that the CCS deal, if completed, will be Amphenol’s largest to date. The deal will also boost the company’s data center offerings to meet the surging artificial intelligence (AI) demand.
On Stocktwits, retail sentiment toward CommScope stock turned to ‘extremely bullish’ (78/100) by late Sunday from ‘bullish’ a day ago and ‘neutral’ a week ago. The message volume also perked up to ‘high’ levels.
Meanwhile, retail users of Stocktwits showed a muted reaction toward Amphenol stock, with sentiment staying ‘neutral’ and message volume at ‘normal’ levels.
Retail trades lauded the deal speculation as “great news” for CommScope.
Another user saw it as a win-win proposition. “Good for $COMM and Great for $APH,” they said.
CommScope and Amphenol shares have soared by about 50% each year to date.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<