Ciena-Tellabs deal off
Telecom equipment makers decide to cancel $4.7 billion stock merger
September 14, 1998: 6:36 a.m. ET
NEW YORK (CNNfn) - Uncertain of its ability to win shareholder approval, telecommunications equipment maker Ciena Corp. agreed Monday to pull the plug on its planned merger with rival Tellabs.
"While we are disappointed that our plans with Tellabs will not come to fruition, we remain excited about our future as an independent entity," said Ciena President and Chief Executive Officer Patrick Nettles.
"Over the short-term, Ciena will continue to face the challenges associated with expanding our customer base, but the core elements of our business remain strong," he said.
Tellabs agreed to acquire Ciena in June in a 1-for-1 stock swap valued at the time at $6.9 billion. The merger was intended to beef up both companies to take on larger rivals Lucent Technologies Inc. (LU) and Canada's Northern Telecom Ltd. (NT).
But half an hour before shareholders were set to vote on the transaction, Ciena announced that AT&T Corp. would not buy certain Ciena technology. AT&T, Ciena said, had decided to stop evaluating Ciena's multiplexer technology, used to boost the capacity of fiber-optic lines.
The announcement came a week after Ciena warned that third-quarter profits would fall more than 50 percent, missing expectations. Subsequently the companies postponed the merger.
Late last month, Lisle, Ill.-based Tellabs repriced the merger at $4.7 billion in stock. Last week, however, Ciena lost a major contract, putting further pressure on its stock price and the deal.
Shares of Ciena (CIEN) closed down 3/8 at 15-15/16 on the Nasdaq Friday, while shares of Tellabs (TLAB) climbed 1 to 45 per share on the Nasdaq.
cnnfn.com |
