UPDATE 2-Harmonic to buy Scopus for $5.62 per share
(Adds details, analyst comments, updates share price)
By Purwa Naveen Raman
BANGALORE, Dec 23 (Reuters) - Harmonic Inc (HLIT.O), a digital video and broadband optical networking systems provider, said it agreed to buy Israel's Scopus Video Networks Ltd SCOP.O for $5.62 a share to boost its international video broadcast market and video processing technology.
The cash offer represents an enterprise value of about $51 million, net of Scopus' cash and short-term investments, and a premium of 46 percent to Scopus' Monday closing price of $3.84.
Shares of Scopus, which develops digital video networking products that enable network operators to offer advanced video services to their subscribers, rose 41 percent to $5.42, while Harmonic shares fell 2 percent to $5.58 in afternoon trade on Nasdaq.
Optibase Ltd (OBAS.O), which currently holds a stake of about 36 percent in Scopus, agreed to vote in favor of the deal and expects to receive $28.7 million in cash upon closing.
The deal is expected to close in the latter part of the first quarter of 2009.
Shares of Optibase soared as much as 69 percent on the news.
About 50 percent of Scopus' revenue comes from companies in the broadcast market, an area where Sunnyvale, California-based Harmonic is trying to expand its presence, CL King analyst Lawrence Harris said, terming the deal "highly complementary."
Scopus generates more than three-fourths of its revenue from outside the United States, with significant contributions from emerging markets such as India and Russia, and its customers include satellite and cable operators, telecom service providers and terrestrial broadcasters.
For Harmonic, United States alone accounts for more than 50 percent of total revenue.
Harmonic will benefit from Scopus' wide base of customers, with no single customer representing more than 10 percent of total revenue, and there is no "significant degree of overlap," Harmonic's Chief Financial Officer Robin Dickson said in a conference call with analysts.
Harmonic expects to realize annual savings of $8 million to $10 million from the deal, making it accretive to its adjusted earnings in 2009.
Financing the deal does not seem to be an issue as Harmonic exited the September quarter with cash and short-term investments of $293.4 million and has no debt, analyst Harris said.
Scopus, which has about 300 employees worldwide, reported revenue of $55.4 million for the first nine months of 2008. (Editing by Deepak Kannan)
