Ceragon Networks Acquires Nera Networks

Ceragon Networks Ltd., provider of 4G/LTE-ready wireless backhaul networks, has entered into an agreement to acquire all of the outstanding shares of Nera Networks AS (NAS), headquartered in Bergen, Norway from Eltek ASA. The consideration for the acquisition is approximately $48.5 million on a cash-free/debt free basis.  

Upon the closing of the transaction, both companies’ assets and core competencies will be combined into a single integrated organization, product family and customer base.

According to the release, the transaction accelerates Ceragon's strategic plans, as the combination of the two companies achieves immediate scale and reach to enable Ceragon to successfully and fully capitalize on global opportunities.

The combination of Ceragon and NAS will result in a partnership of both short and long-haul microwave backhaul solutions, with a beneficial cost structure as Ceragon’s proven design to cost effectiveness is applied, over time, to the full product family.

 “This is a very important step for both our companies, and one which will allow us - together - to immediately become the premier microwave backhaul specialist at a crucial juncture for the industry,” said Ira Palti, President and CEO of Ceragon Networks. “We are in the early stages of a period of demand driven by continued subscriber growth in key regions and exponential increases in mobile data.  During such a period, scale and reach are particularly important.  This combination enables us to achieve both and allows for smooth integration due to the complementary nature of the two companies.”

The acquisition will be funded through a combination of cash on hand and approximately $35 million of bank debt. The transaction is expected to be accretive on a quarterly basis by the end of 2011.  Once the integration has been completed, the company is targeting a combined operating model for 2012 with gross margins similar to Ceragon’s current level, and operating profit of 10% based on a quarterly combined run rate revenue of about $150 million.

Jørgen Larsen, CEO of Eltek ASA said,”Eltek has evaluated several strategic alternatives for the future development of the microwave transmission activities in Nera Networks and  we believe that a business combination of NAS with Ceragon, a leading wireless backhaul player, will provide the highest benefit to NAS’ customer base.”

A conference call took place yesterday, January 19th, at 2:30 p.m. If you were unable to join the call live yesterday, the replay numbers are: (USA) (800) 475-6701     (International) (320) 365-3844, Access Code: 189297. A replay of both the call and the webcast will be available through February 19, 2011.

Want to learn more about 4G wireless technologies? Then be sure to attend the 4GWE Conference, collocated with TMC’s ITEXPO East, taking place Feb 2-4, 2011, in Miami. The 4GWE Conference provides unmatched networking opportunities and a robust conference program representing the wireless ecosystem. The conference not only brings together the best and brightest in the wireless industry, it actually spans the communications and technology industry. To register, click here.