Need To Know

Carlyle Buying CommScopeThe Carlyle Group will take the communications company CommScope Inc. private for $3.9 billion, in a play to catch the upswing in mobile data transmission.

The deal, announced by CommScope near the end of October, values the company at $31.50 per share, a premium of about 36 percent over the stock’s closing on the last trading day before the company announced the potential transaction. The price represents a valuation of 11x the company’s $351.3 million trailing-12-month cash flow from continuing operations. CommScope also carries long-term debt of $1.34 billion and cash and short-term investments of $671 million.

CommScope, based in Hickory, N.C., builds infrastructure solutions for communication networks. The company suffered a significant revenue decline in 2009 in its “antenna, cable and cabinet group” segment, which accounts for more than 40 percent of its sales, as a result of a struggling global economy. The segment has improved somewhat this year, and the company’s third quarter results, announced the same day as the Carlyle deal, topped anlysts’s expectations.

“While the global economy remains challenging, popular devices like smart phones and tablets have created the demand for a mobile Internet. We remain excited about our long-term growth opportunities,” Frank Drendel, CommScope’s chairman and CEO, said in announcing the results.

“CommScope has a clear strategy, a culture of operational excellence and strong commitments to its employees, customers and partners around the world,” Bud Watts, a managing director Carlyle and and head of its technology group, said in the press release announcing the deal.

Carlyle, the Washington, D.C., buyout megafirm, counts more than 50 technology and business services companies in its portfolio now. The firm was part of the consortium that took Freescale Semiconductor private for $17.5 billion in December 2006.

In July, the firm and and Riverstone Holdings LLC, the energy-focused private equity firm, made “significant capital investment” in Quorum Business Solutions Inc., a Dallas-based provider of software and consulting services to the oil, gas, and renewable energy industry. Financial terms were not disclosed.

Terra Firma Fights Citi

A verdict could come soon in the multi-billion dollar legal fight between the British buyout shop Terra Firma and the New York financial giant Citigroup Inc.

Guy Hands, the head of Terra Firma, accuses a former friend, Citi banker David Wormsley, of lying to him in the lead-up to the firm’s £4 billion ($6.4 billion) purchase of music publisher EMI in 2007, according to Reuters, publisher of Buyouts. Citi provided £2.6 billion in financing for the deal. The portfolio company, which counts Nat King Cole and the Beatles among its roster of acts, is struggling with the debt load and structural changes in the music industry.

Terra Firma is seeking up to $8 billion in damages for the fraud; alternatively, the firm could lose EMI to Citi. A nine-person jury is hearing the case, and testimony is expected to end by Nov. 5.