M/A-Com to Sell 4 Businesses to New York Firm for $220 Million

M/A-Com will sell its cable and home communications businesses, including a cable television scrambling operation in San Diego, to New York-based General Instrument for $220 million, company officials said Wednesday.

The four businesses to be sold generated 24% of M/A-Com’s $844 million in 1985 revenues. General Instrument, which last year reported $794 million in revenues, manufactures electronics products, including equipment for the cable television industry.

Included in the sale is M/A-Com’s video products group in San Diego, which earlier this year developed a cable television scrambling system used by major cable television programmers to scramble satellite signals.

M/A-Com already has shipped 90,000 of its “Videocipher” units, which were developed in San Diego and made in Puerto Rico.

“We see Videocipher as a great fit with our existing cable products,” said General Instrument spokesman Edward Kearney.

Videocipher, which is controlled by a computer in San Diego, has “great growth potential” because all major U.S. cable programmers will eventually use the system, Kearney said.

M/A-Com’s video products operation in San Diego “will have a different corporate parent after the sale . . . but it will be business as usual” for M/A-Com’s more than 150 video products employees, according to Larry Dunham, executive vice president of M/A-Com’s video products group.

Linkabit, M/A-Com’s largest San Diego operation with about 1,000 employees, is not included in the divestiture. Linkabit, an electronics manufacturer formed in 1968, was purchased by Burlington, Mass.-based M/A-Com in 1980.

Proceeds from the sale, which is to be completed by Sept. 27, will be used to reduce debt, according to a M/A-Com spokesman. As part of an ongoing restructuring, M/A-Com also has been negotiating the sale of an information systems division that last year generated $100 million in revenues.

“It appears that M/A-Com’s restructuring will be more significant than anticipated,” suggested Joseph Bellace, a New York-based industry analyst with Merrill Lynch. “It’s hopefully a good deal, though, for both companies.

“General Instrument is essentially solidifying its position in the cable television industry,” Bellace said. “They’ll have the broadest and largest market share in the whole cable television industry.”

In addition to the San Diego Videocipher operation, General Instrument agreed to purchase M/A-Com’s coaxial cable business, a division that produces antennas and electronic products for television earth stations, and an operation that manufactures cable television converters. The operations to be sold are located in San Diego, Hickory, Catawba and Newton, N.C.; El Paso, and Barceloneta, Puerto Rico.