Aviat Networks announced its agreement with NEC Corporation to buy NEC’s wireless transport business in a transaction valued at $70 million in cash and shares.
Aviat and NEC possess complementary customers and markets and the combination will enable Aviat to pursue select new Tier 1 business.

“The transaction advances Aviat’s strategic goal to create the leading wireless transport specialist and to add meaningful scale to our business,” said Pete Smith, CEO of Aviat Networks. “The scale and capabilities will enable Aviat to compete even more effectively against the large generalists and fiber backhaul providers.”

Aviat said it will be add $150 million in revenue that will be accretive to EBITDA, non-GAAP EPS, and free cash flow by the end of the first year and 11-13 percent EBITDA by the end of year two.

The combined business would service over 20 Tier 1 service providers. Aviat will become a leader in private networks following the deal. NEC has shipped over 3 million PASOLINK units, its wireless transport solutions brand, worldwide. Aviat’s business will have increased exposure to global 5G spend and private network opportunities that will further diversify Aviat’s business.

In 2019, Aviat and NEC entered into an agreement for Aviat to serve as the channel partner for NEC in North America.

Aviat expects the deal to close in the third calendar quarter of 2023. The deal consideration is $45 million in cash and $25 million in Aviat stock.

Aviat expects to fund the cash portion of the acquisition from committed debt financing.  NEC will appoint a person to Aviat’s board of directors. NEC will have a minority stake in Aviat.

Aviat has reported revenues of $83.5 million for its fiscal 2023 third quarter against $74.5 million in the same fiscal 2022 period. Aviat generated revenue of $46.1 million (–6.1 percent) from North America, while international revenue was $37.4 million (+46.9 percent).

This combination will create the largest wireless transport specialist and the third largest microwave vendor by revenue based on the latest industry report from Dell’Oro.

The deal enables NEC to focus efforts on its core business. NEC will continue to operate the PASOLINK business in Japan.