Phone networking company ADC is buying rival equipment maker Andrew Corp. to create a giant player in the wireless and wireline network infrastructure space.
Wall Street disagreed with the move, however. Analysts said the $2 billion price tag was too high and ADC’s stocks ended trading on Wednesday at $17.92, down $4.46 from Tuesday.
Still, both companies’ boards of directors have approved the transaction, which faces the typical regulatory and governmental reviews. ADC said it hopes to close the deal in four to six months. Both companies will continue operating independently until the merger is complete.
Andrew shareholders will receive 57 cents of an ADC common share for each common share of Andrew they hold. Once the merger is closed, ADC shareholders will own approximately 56 percent of the combined company, while Andrew shareholders will control the remaining 44 percent. ADC will assume all of Andrew’s debt and Andrew's convertible notes will convert into ADC shares.
Once combined, ADC and Andrew plan to provide connectivity solutions for copper, coaxial, fiber, radio frequency, broadcast and enterprise networks, as well as wireless solutions for antennas, cable products, base station subsystems, in-building and distributed coverage, geolocation systems and satellite communications.
Credit Suisse Securities (USA) LLC acted as the primary financial advisor to ADC. Dorsey & Whitney LLP served as ADC's primary outside legal counsel. Citigroup Corporate and Investment Banking acted as the primary financial advisor to Andrew with help from Lehman Brothers Inc. Mayer, Brown, Rowe & Maw LLP served as Andrew's primary outside legal counsel.
Robert E. Switz, president and CEO of ADC, will serve in that same capacity for the combined company. Andrew’s president and CEO, Ralph E. Faison, will be a consultant to the combined company, ADC said.
ADC www.adc.com
Andrew Corp. www.andrew.com
