Tellabs, a developer of bandwidth management and optical transport systems, is to acquire AFC, a designer of multi-service broadband systems, for $1.9 billion.
Under the terms of the transaction, which was approved by both companies’ boards of directors, AFC stockholders will receive 1.55 shares of Tellabs common stock and $7.00 in cash for each AFC share.
Based on Tellabs’ closing price on May 19, 2004, this 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% of the company and AFC stockholders will own 25%.
The transaction is expected to be accretive to Tellabs’ 2005 pretax income on a per-share basis, excluding amortisation associated with acquired intangibles and other purchase accounting adjustments.
The transaction is subject to certain 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 in international locations. It will have research and development centres in Illinois, California, Florida, Texas, Virginia, Denmark and Finland, as well as 41 sales offices in 29 countries.