Scientific Atlanta (NYSE:SFA)
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Cisco Systems, Inc. (NASDAQ:CSCO), and
Scientific-Atlanta, Inc. (NYSE:SFA), today announced a definitive
agreement for Cisco to acquire Scientific-Atlanta. Scientific-Atlanta
is a leading global provider of set-top boxes, end-to-end video
distribution networks and video system integration. The combined
entity creates a world class, end-to-end triple play solution for
carrier networks and the digital home. In addition, upon closure, the
market opportunities represented by this acquisition will become part
of Cisco's Advanced Technology portfolio.
Under the terms of the agreement, Cisco will pay $43 per share in
cash in exchange for each share of Scientific-Atlanta, and assume
outstanding options, for an aggregate purchase price of approximately
$6.9 billion, or approximately $5.3 billion net of
Scientific-Atlanta's existing cash balance. The transaction will be
accounted for in accordance with generally accepted accounting
principles, and the acquisition of Scientific-Atlanta is expected to
close in the third quarter of Cisco's fiscal year 2006. Cisco
anticipates this transaction will be neutral to its FY2006 earnings,
slightly accretive to its non-GAAP (pro forma) FY2007 earnings, and
will be financed with a combination of cash and debt. The acquisition
has been approved by the board of directors of each company and is
subject to various standard closing conditions, including approval
under Hart Scott Rodino and similar laws outside the U.S. and by the
shareholders of Scientific-Atlanta.
"Video is emerging as the key strategic application in the service
provider triple play bundle of consumer entertainment, communication
and online services," said John Chambers, president and chief
executive officer of Cisco Systems. "The combination of Cisco and
Scientific-Atlanta brings unmatched experience and innovation in
delivering large scale video systems and networks, and the addition of
Scientific-Atlanta further extends Cisco's commitment to and
leadership in the service provider market. Moreover, Cisco's
international presence and IP leadership will also create strategic
synergies that accelerate the combined growth opportunity."
Chambers continued, "As consumers demand more sophisticated
information and entertainment services in their home, tightly coupled
applications, devices and networks will be essential. The collective
strength of Linksys and Scientific-Atlanta will extend Cisco's
leadership position across the entire networked digital home."
"We believe that this combination of Cisco and Scientific-Atlanta
will benefit our shareholders, our customers and our employees," said
Jim McDonald, chairman, chief executive officer and president of
Scientific-Atlanta. "The combined strengths and resources of our two
companies will position us to address more quickly the growing number
of opportunities in the markets we serve and enable us to create new
products and services that might not have existed otherwise."
Scientific-Atlanta has platforms and technologies that enable
scaling to millions of subscribers quickly and easily. This, along
with the Cisco IP Next Generation Network architecture, will offer
providers an open platform for service differentiation, allowing them
to move beyond video/IPTV to develop and deliver a variety of
integrated media services in the connected home.
Following the close of the transaction, Scientific-Atlanta will
become a division of the Routing and Service Provider Technology Group
under the leadership of Cisco Senior Vice President Mike Volpi. Jim
McDonald will report directly to Mr. Volpi.
Prior to the close, Cisco and Scientific-Atlanta will operate as
separate businesses and will continue to work with their existing
partners. Following the close of the transaction, Cisco is committed
to retaining the relationships and go-to-market strategies that both
companies have developed.
Scientific-Atlanta was founded in 1951 and held its Initial Public
Offering (IPO) on July 29, 1959. The company has more than 7500
employees. For FY2005, which ended July 1, 2005, Scientific-Atlanta
reported revenues of $1.91 billion.
Editor's Note:
-- A conference call with CEOs John Chambers and Jim McDonald to
discuss Cisco's acquisition of Scientific-Atlanta will be held
at 8:30 a.m. Eastern Time on Friday, November 18, 2005. The
dial-in number is 888-946-6308 (United States); 212-547-0242
(international); corresponding slides and a webcast will be
available at http://newsroom.cisco.com/webcast/05322_1.html
-- A replay of the Cisco/Scientific-Atlanta CEO conference call
will be available from 11:00 a.m. Eastern Time on November 18,
2005 until 8:00 p.m. Eastern Time on November 23, 2005 at
800-841-4034 (United States); 203-369-3360 (international).
-- A conference call detailing Cisco's and Scientific-Atlanta's
business and technological synergies with Mike Volpi, senior
vice president, routing and service provider technology group
at Cisco, and Michael Harney, corporate senior vice president
and president, subscriber networks at Scientific-Atlanta, will
be held at 11:00 a.m. Eastern Time on Friday, November 18,
2005. The dial-in number is 888-469-1386 (United States);
212-547-0420 (international), and a webcast will be available
at http://newsroom.cisco.com/webcast/05322_2.html
-- A replay of the Volpi/Harney conference call will be available
from 1:30 p.m. Eastern Time on November 18, 2005 until 8:00
p.m. Eastern Time on November 23, 2005 at 888-568-0125 (United
States); 203-369-3460 (international).
-- Additional information regarding the acquisition will be
available at http://newsroom.cisco.com.
About Cisco Systems
Cisco Systems, Inc. (NASDAQ:CSCO) is the worldwide leader in
networking for the Internet. Information on Cisco can be found at
http://www.cisco.com. For ongoing news, please go to
http://newsroom.cisco.com.
About Scientific-Atlanta
Scientific-Atlanta is a leading supplier of digital content
distribution systems, transmission networks for broadband access to
the home, digital interactive set-tops and subscriber systems designed
for video, high-speed Internet and voice over IP (VoIP) networks, and
worldwide customer service and support.
Cisco, Cisco Systems, Linksys and the Cisco Systems logo are
registered trademarks of Cisco Systems, Inc. and/or its affiliates in
the U.S. and certain other countries. All other trademarks mentioned
in this document are the property of their respective owners.
Scientific-Atlanta and the Scientific-Atlanta logo are registered
trademarks of Scientific-Atlanta, Inc.
Forward-Looking Statements
This press release contains forward-looking statements which are
subject to safe harbors created under the U.S. federal securities
laws. These statements include, among others, statements regarding the
expected financial performance of Cisco (including earnings
projections) following completion of the acquisition, Cisco's ability
to achieve the expected synergies and other strategic benefits as a
result of the acquisition, the strengthening of Cisco's leadership
position across the entire networked digital home as a result of the
acquisition, and the timeframe during which the acquisition is
expected to close. Statements regarding future events are based on the
parties' current expectations and are necessarily subject to
associated risks related to, among other things, obtaining
Scientific-Atlanta's shareholder and regulatory approval of the
acquisition, the potential impact on the business of
Scientific-Atlanta due to uncertainty about the acquisition, the
retention of employees of Scientific-Atlanta and the ability of Cisco
to successfully integrate Scientific-Atlanta's market opportunities,
technology, personnel and operations and to achieve planned synergies.
Therefore, actual results may differ materially and adversely from
those expressed in any forward-looking statements. For information
regarding other related risks, see the "Risk Factors" section of
Cisco's most recent Form 10-K filed with the SEC on September 19, 2005
and of Cisco's subsequently filed Forms 10-Q. The parties undertake no
obligation to revise or update any forward-looking statements for any
reason.
"Forward-looking statements," as defined in the Private Securities
Litigation Reform Act of 1995, may be included in this news release. A
variety of factors could cause Scientific-Atlanta's actual results to
differ from the anticipated results expressed in such forward-looking
statements. Investors are referred to Scientific-Atlanta's Cautionary
Statements (Exhibit 99.1 to the company's most recent Form 10-Q),
which statements are incorporated into this news release by reference.
Additional Information and Where to Find It
Scientific-Atlanta has agreed to file a proxy statement in
connection with the proposed acquisition. The proxy statement will be
mailed to the shareholders of Scientific-Atlanta. Scientific-Atlanta's
shareholders are urged to read the proxy statement and other relevant
materials when they become available because they will contain
important information about the acquisition and Scientific-Atlanta.
Investors and security holders may obtain free copies of these
documents (when they are available) and other documents filed with the
Securities and Exchange Commission at the SEC's web site at
www.sec.gov. In addition, investors and security holders may obtain
free copies of the documents filed with the SEC by Scientific-Atlanta
by going to Scientific-Atlanta's Investor Relations page on its
corporate website at www.scientificatlanta.com.
Scientific-Atlanta and its officers and directors may be deemed to
be participants in the solicitation of proxies from
Scientific-Atlanta's shareholders with respect to the acquisition.
Information about Scientific-Atlanta executive officers and directors
and their ownership of Scientific-Atlanta common stock is set forth in
the proxy statement for the Scientific-Atlanta 2005 Annual Meeting of
Shareholders, which was filed with the SEC on September 27, 2005.
Investors and security holders may obtain more detailed information
regarding the direct and indirect interests of the Scientific-Atlanta
and its respective executive officers and directors in the acquisition
by reading the preliminary and definitive proxy statements regarding
the merger, which will be filed with the SEC.
In addition, Cisco and its officers and directors may be deemed to
have participated in the solicitation of proxies from
Scientific-Atlanta's shareholders in favor of the approval of the
acquisition. Information concerning Cisco's directors and executive
officers is set forth in Cisco's proxy statement for its 2005 annual
meeting of shareholders, which was filed with the SEC on September 26,
2005, and annual report on Form 10-K filed with the SEC on September
19, 2005. These documents are available free of charge at the SEC's
web site at www.sec.gov or by going to Cisco's Investor Relations
Website at http://www.cisco.com/go/investors.