CommScope announced a plan to spin off its Home Networks business into a separate listed company. CommScope shareholders will be issued shares in the new company on a pro rata basis, with the separation expected to be completed in Q1 2022.
CommScope has struggled to turn a profit with the business since it acquired Arris in 2019, leading to several major writedowns of the activities. The spin-off will take the gateway business off of CommScope's books and give it its own means of financing and freedom for deal-making.
The move comes as part of a bigger cost-cutting drive at the company, called CommScope NEXT, in which CEO Chuck Treadway has led a review of the group's assets since he joined last October. He said it was clear that the Home Networks business did not fit with the company's growth profile or required investment returns, and the activities would be better off as an independent company.
Other cost reductions underway at CommScope are expected to at least offset the EBITDA losses at Home Networks, the CEO added. The savings will be reinvested in growth areas of the business, allowing the company to avoid any further increase in debt.
Joe Chow, Home Networks senior vice president, will become the CEO of the stand-alone Home Networks company. CommScope will continue with the three divisions Broadband Networks, Outdoor Wireless Networks, and Venue and Campus Networks.
