ADC Telecommunications to Buy Two Optics Companies for $952 Mln
Minneapolis, May 5 (Bloomberg) -- ADC Telecommunications Inc. said it agreed to buy two closely held optical-parts companies for $952 million in stock and cash as the phone-equipment maker seeks a bigger piece of the burgeoning market.
ADC will pay about 15.2 million shares, or $872 million, for Altitun AB, a Kista, Sweden-based company whose lasers speed the flow of information on fiber-optic networks. ADC also agreed to buy Ibsen Micro Structures A/S for $80 million in cash. Ibsen, based in Copenhagen, Denmark, makes parts used in optical transmission equipment.
Sales of fiber-optic components are forecast to swell to $23.1 billion in 2003 from $6.7 billion last year, according to researcher Ryan Hankin Kent Inc. Revenue from the parts helped boost ADC's fiscal second-quarter sales by about 47 percent.
``ADC now has the critical mass to be a formidable force in this marketplace,'' ADC Chief Executive William Cadogan said. ``We look to be the No. 2 supplier of optical components.''
The Altitun acquisition will cut ADC's earnings by about 8 cents a share in both fiscal 2000 and 2001, ADC said.
Sales from ADC's optics business are on pace to total about $400 million in the 12-month period that began in February. JDS Uniphase Corp., the biggest maker of fiber-optic components, expects revenue from fiscal 2000 to be about $1.39 billion.
Fiber optics is the process of beaming information on hair- thin strands of glass. Today, one strand of fiber can handle Internet access for 17 million homes. The business of making parts for such equipment is dominated by JDS Uniphase, Lucent Technologies Inc. and Corning Inc.
Acquisition Search
The agreements cap months of searching for ADC. The company in February said it was in acquisition talks with a number of unidentified fiber-optic component makers. On March 14, Chief Financial Officer Robert Switz said ADC had made several offers, only to see negotiations stall after the companies demanded more money.
``ADC has gotten quite a good deal here,'' Cadogan said of the two agreements. ``We have a reputation for not overpaying, and we've taken advantage of the back-off in stock prices.''
Nortel Networks Inc. agreed to buy CoreTek Inc., Altitun's main rival, in March for as much as $1.43 billion.
Minneapolis-based ADC said revenue from fiber-optic parts and equipment doubled in the second quarter, which ended Sunday. The company bought Spectracom Inc. last year to add lasers that amplify light signals on optical networks.
ADC shares fell 1 1/8 to 57 1/4 on the Nasdaq National Market. The stock has more than doubled in the past year, reaching a record 64 1/2 on April 28, even as other telecommunications stocks fell.
Altitun has 45 employees. Ibsen has 40.
ADC expects the purchases to close this month.
May/05/2000 1:01 GMT
For more stories from Bloomberg News, click here.
(C) Copyright 2000 Bloomberg L.P. |
