The Wall Street Journal -- February 17, 1998
Tellabs Agrees to Pay
$670 Million in Stock
For Virginia Company
LISLE, Ill. -- Tellabs Inc. said it agreed to acquire Coherent Communications
Systems Corp., a small speech-processing technology concern, in a stock
swap valued at about $670 million.
Terms call for Coherent holders to receive 0.72 Tellabs common share for
each Coherent common share they own.
In Nasdaq Stock Market trading Friday, shares of Coherent gained $1.25 to
$32 while those of Tellabs increased $1.125 to $57.9375.
Tellabs said that, excluding one-time transaction costs, it expects the
agreement to be modestly accretive to earnings this year. For the fiscal year
ended Jan. 20, Coherent reported sales of $73.7 million and net earnings of
$13.9 million, or 90 cents a basic share. Tellabs reported sales for fiscal 1998
ended Jan. 2 of $1.2 billion and earnings of $263.7 million, or $1.46 a basic
share.
Both companies design and produce echo-canceler and other
speech-processing devices, used in the telecommunications industry
world-wide. The acquisition is seen as adding to Tellabs' overseas presence,
since about 75% of Coherent's sales come from outside the U.S.
Coherent's board, which unanimously approved the acquisition, is
recommending it to shareholders. The company, based in Ashburn, Va., said
Safeguard Scientifics Inc., which holds an estimated 30% of Coherent,
agreed to vote in favor of the transaction.
The deal, which is expected to be accounted for as a pooling-of-interests and
tax-free reorganization, is subject to approval by various government
agencies.
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