Stratex Networks, Inc. (STXN) Message Board

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Technology Stocks : Stratex Networks, Inc. (STXN)

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To: The Ox who wrote (1734)	9/5/2006 9:06:23 PM
From: Rob Preuss	Read Replies (1) of 1762

STXN to merge with Harris Microwave Comms Division. In a nutshell: They will form a new publically traded (NASDAQ) company called Harris Stratex Networks. Harris Corporation will be the single largest shareholder owning 56% of the new company. STXN shareholders will together own 44%. Harris will not be able to increase or decrease their shares for two years... after that, things loosen up for them (but not all at once). A quick glance at the numbers makes this look like a fairly good deal for STXN shareholders. But I'm a bit concerned about their ability to meet their projected numbers. I am pleased ot see that Kissner will stay on as non-executive board chairman. Altogether the board will have 9 members: 5 appointed by Harris (2 of these will be independent) and 4 appointed by STXN (3 of these will be independent)... so they will have 5 independent board members. STXN share price is up bigtime today and even more after hours... this may squeeze the shorts hard which would then push the price even higher. That great for the short term. But what does this transaction mean for the long term? They expect to close the deal sometime around November and info will dribble out between now and then. It will take some time to digest this news and to figure out if the long-term prospects are really as good as they project. Some big points they made include: the two parts of this whole are quite complementary (only 5% overlap), the increased scale will help both of them to reduce costs and to better compete, they expect to save $35M/year starting in FY2008 (which ends June 2008), and the deal is expected to be accretive to earnings for both parts. Too good to be true??? Rob Harris Corporation's (HRS) Microwave Communications Division to Merge with Stratex Networks 09-05-2006 04:13:06 PM Harris Corporation (NYSE: HRS) and Stratex Networks, Inc. (Nasdaq: STXN) announced that they have signed a definitive agreement under which Harris' Microwave Communications Division and Stratex Networks will combine operations to form a new company named Harris Stratex Networks, Inc. With combined annual revenue of approximately $600 million, Harris Stratex Networks, Inc. will be the largest independent provider of wireless transmission network solutions and will have customers in over 150 countries. Under terms of the agreement, Harris Corporation will contribute its Microwave Communications Division and $25 million of cash in exchange for approximately 56 percent ownership of the combined company. Stratex Networks shareholders will exchange their existing stock on a tax-free basis for approximately 44 percent ownership of the combined company. The transaction is expected to be neutral to Harris Corporation earnings per share in fiscal year 2007 and accretive by approximately $.07 per diluted share in the fiscal year ending June 2008, excluding a one-time gain as a result of the transaction and acquisition and integration expenses. The transaction is expected to be slightly accretive to Stratex Networks earnings per share in fiscal year 2007 and accretive by approximately $.08 per diluted share in fiscal year 2008, excluding acquisition and integration expenses. Stocks Mentioned HRS: $44.28 Change ($): 0.88 Change (%): 2.03 Volume: 419400 STXN: $4.04 Change ($): 0.37 Change (%): 10.08 Volume: 882783

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