Tellabs Pays $1.9 Billion For Access Equipment Developer AFC

Tellabs said Thursday it has acquired equipment maker AFC in a deal valued at $1.9 billion, adding multi-service access, DSL and fiber-to-the-premises equipment to its existing access, metro and transport

May 20, 2004

2 Min Read
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Tellabs said Thursday it has acquired equipment maker AFC in a deal valued at $1.9 billion, adding multi-service access, DSL and fiber-to-the-premises equipment to its existing access, metro and transport product portfolio.

For the past few years, Tellabs has added to its product line by purchasing Ocular Networks and Vivace Networks. Through AFC, Tellabs now gains access to a well-known access product portfolio.

"Together, Tellabs and AFC create a strategic global telecom equipment supplier that will lead the industry's shift to broadband data with end-to-end access and transport solutions," Tellabs President and CEO Krish Prabhu said in a statement.Under the terms of the transaction, which was approved by the boards of both companies, AFC stockholders will receive 1.55 shares of Tellabs common stock and $7 in cash for each AFC share. Based on Tellabs' closing price on Wednesday, that represents $21.24 in value per AFC share, or a total value of $1.9 billion.

Upon completion of the transaction, Tellabs stockholders will own approximately 75 percent of the company; AFC stockholders will own 25 percent. Including synergies, the transaction is expected to be accretive to Tellabs' 2005 pre-tax income on a per-share basis, excluding amortization associated with acquired intangibles and other purchase accounting adjustments.

Once the acquisition is completed, current AFC Chairman and CEO John Schofield will become chief operating officer and a director of Tellabs. The Tellabs board will be expanded to include three AFC directors, including Schofield, increasing its size to 12 members.The transaction is subject to closing conditions, including regulatory approval and approval by Tellabs' and AFC's stockholders. It is expected to close in the second half of 2004.

The combined company will employ about 4,100 people, including nearly 1,000 overseas. It will have research and development centers in Illinois, California, Florida, Texas, Virginia, Denmark and Finland, as well as 41 sales offices in 29 countries.

Loring Wirbel contributed to this story.

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