With news last week that CommScope Inc. had signed an agreement to acquire Andrew Corp. after having been rebuffed for a previous bid nearly a year ago, one element that reportedly has not changed is the intent to sell off Andrew’s satellite communications group.

In a deal estimated to be worth $2.6 billion, CommScope, of Hickory, N.C., will acquire all outstanding shares of Winchester, Ill.-based Andrew for $15 apiece. The price is a 53 percent increase over a $1.7 billion offer Andrew rejected in August, when Andrew also terminated an agreement to merge with ADC Telecommunications Inc.

In May, Andrew unveiled plans to sell its satellite communications business, which manufactures satellite antenna systems and electronics for home, commercial and military markets. The division accounted for 6 percent of the company’s revenues of $503 million in the 2007 second quarter. Meanwhile, overall revenues improved 4 percent from the same period a year ago, with Andrew posting a profit of $3.6 million in the 2006 second quarter.

Nevertheless, the consensus opinion is that the satellite communications component is not consistent with the other core enterprises.

"We believe that the combination of Andrew and CommScope creates a strong company with long-term advantages for our customers and employees,” Ralph Faison, president and CEO of Andrew, said in a statement. “Our two companies fit together strategically with leading complementary product offerings and geographical strengths.”

Satellite communications are not considered to be among them. As J. Hingorani, an analyst with Standard & Poor’s explained, “as far as the satellite division goes, they had announced last quarter their plans to look for strategic options. It’s just not something that fits in with the core group of products.

“Analysts haven’t questioned it because it’s underperforming and it doesn’t fit the portfolio,” Hingorani added. “How that plays into the acquisition, I’m not sure.”

Rick Aspan, Andrew’s director of public relations, said “basically we indicated several months ago that we were looking at areas of our business that were underperforming, and coming to decisions about whether to bring them up to where we needed them to be, or to divest them. We decided that selling it was the best way to go.”

Aspan continued that while the satellite communications business grew out of the company’s broader antenna offerings, it was pulled out as its own division approximately two years ago, and “in the last year it was underperforming our expectations and it was affecting the overall health of the company.”

Going forward, analyst Ari Bensinger of Standard & Poor’s said “from CommScope’s perspective, there are a lot of synergies related to what they consider to be core. The primary business that allows those synergies from procurement and manufacturing are the cables that go to the Earth stations. I don’t see where they can gain synergies with the satellite business. It’s just a different beast.”

Though declining to offer specifics about the possible price or timing of any sale, Aspan said that Andrew had been contacted by several interested parties.
“We’re still in the process and still pushing to get it brought to closure,” he said. “There have been several players involved … several that we were working with. I won’t offer a specific date, but we have had a lot of good healthy discussions, and we’ll get to the best deal.”