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Betting heavily on the future of wireless, private equity company Carlyle Group has offered $6.5 billion for two telecomm firms with deep roots in wireless. In separate deals this week, Carlyle offered $3.9 billion for CommScope and $2.6 billion for Syniverse.
CommScope, which provides wireless network hardware including antennas and cables, is sitting tight to see if a counteroffer develops. The deal is scheduled to become final Dec. 5 and CommScope is free to find another buyer with a higher offer. However, if the Carlyle-CommScope deal falls through, CommScope must pay Carlyle a $43.3 million breakup fee. CommScope reported recent annual revenue of about $3 billion.
The two target companies appear to be at least partially complementary. Syniverse is also a major player in the wireless world, supplying roaming and messaging services. Both Syniverse and CommScope are positioned to benefit from the new 4G rollouts planned by leading U.S. carriers including AT&T, Verizon Wireless, T-Mobile USA, and Sprint Nextel.
Carlyle is willing to pay a hefty premium for Syniverse, which had revenue of $483 million last year, dwarfing the $2.6 billion acquisition bid.
Syniverse's value has been sweetened by its recent acquisition of VeriSign's messaging business, which facilitates the growing wireless trend to deliver increased data and digital media to end users. Syniverse stock jumped 30% on Carlyle's $31 a share offer. The Syniverse deal is scheduled to close in the first quarter of 2011.
Carlyle has moved away from carrier acquisitions after it acquired Verizon Communications' landline operation in Hawaii for $1.6 billion in 2004. The venture failed and since then Carlyle has been more interested in infrastructure deals than in carriers.