Harmonic Announces Definitive Agreement to Acquire Scopus

December 23, 2008

Source: Harmonic

Combination Extends Worldwide Customer Base; Strengthens Technology Leadership; Accretive to Non-GAAP Earnings with Substantial Synergies

Harmonic Inc and Scopus Video Networks Limited, a global provider of digital video networking solutions, today announced the signing of a definitive agreement pursuant to which Harmonic will acquire Scopus.

The acquisition will extend Harmonic's worldwide customer base and strengthen its market and technology leadership, particularly in international video broadcast, contribution and distribution markets.

Under the terms of the definitive agreement, which has been approved by the Board of Directors of both companies, Harmonic will pay $5.62 in cash for each outstanding share of Scopus, representing an enterprise value of approximately $51 million, net of Scopus' cash and short-term investments. The proposed acquisition is subject to customary conditions, regulatory approvals and the approval of Scopus' shareholders, and is expected to close in the latter part of the first quarter of 2009. Harmonic has received voting agreements supporting the proposed acquisition from shareholders representing approximately 50% of Scopus' outstanding shares.

Harmonic expects to realize cost synergies upon full integration of Scopus of $8-10 million on an annualized basis, making the transaction accretive to Harmonic's non-GAAP earnings in 2009, exclusive of the amortization of intangibles and non-recurring charges such as restructuring and transaction costs. Harmonic will determine the appropriate purchase accounting for the transaction at closing and, accordingly, cannot reasonably estimate the impact on GAAP earnings at this time. See "Use of Non-GAAP Financial Measures" below.


For the first nine months of 2008, Scopus reported revenues of $55.4 million, an increase of 35% over the comparable period of the prior year. Approximately 79% of these revenues were outside the United States, with no single customer representing more than 10% of total revenues. Scopus has approximately 300 employees worldwide.

"This acquisition extends Harmonic's diversification strategy, providing us with an expanded international sales force and customer base, particularly in video broadcast, contribution and distribution markets, as well as complementary video processing technology and expanded research and development capability," said Patrick Harshman, President and Chief Executive Officer of Harmonic. "Like Harmonic, Scopus has strong gross margins and a proven track record of innovation and growth. By combining our two companies, we see significant opportunities for product, sales and cost synergies."

"The combination of Harmonic and Scopus will further extend Harmonic's video delivery leadership," said Yaron Simler, Chief Executive Officer of Scopus. "Harmonic brings its powerful customer relationships, brand reputation, technology leadership and financial resources. Scopus brings its highly skilled employees, proven distribution channels, strong customer relationships and sales momentum in emerging international markets.

Scopus' exciting new video products, including our next generation integrated receiver processor (IRP) platform, are a great fit with Harmonic's portfolio of industry-leading products and solutions. We see this transaction as very beneficial for the customers and employees of both companies."


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