RealTime IT News

Andrew Calls Off ADC Merger... For Now

After watching its stock value slide, Andrew's $2 billion merger with ADC is off.

Citing shareholder concern over the all-stock deal, the two companies announced Andrew would pay ADC $10 million and put any talk of merger on hold for now.

Soon after the ADC plan was announced in May, valuation of two companies dropped by more than 40 percent, creating an opening for an alternative bid from CommScope.

"We're not out looking to sell the company or merge for the sake of merging," Andrew spokesperson Rick Aspan told internetnews.com.

Andrew also rejected a rival $1.7 billion all-cash acquisition offer from CommScope, in a statement calling the bid "wholly inadequate."

As a result, CommScope decided not to pursue the matter for now. CommScope believed a merger would mean savings for both companies.

Has Andrew made the right decision to spurn two offers to merge in an increasingly consolidated telecom industry?

In June, Nokia and Siemens announced they would join forces, creating a company worth $30 billion.

Alcatel and Lucent earlier formed another telecom giant. Possibly sparking them all: the 2005 merger of AT&T and Bell South .

Ralph Faison, Andrew's president and CEO, said a merger wasn't the company's only option. Faison said he was confident Andrew could meet customer needs as an independent company.

ADC CEO Robert Switz expressed disappointment that the "merits of the transaction were unrecognized in the marketplace," according to a statement.

Despite the merger pull-out, Switzer said ADC will accomplish its goals.

In a May conference call announcing the proposed merger, Switz said consolidation was the future, as previously reported. "The customer base is becoming one," he told reporters.

ADC believes the downturn in the tech market is responsible for the merger withdrawal.

"If this was announced in January, it probably would have been approved," said ADC spokesperson Mark Borman.

The end of current merger talks between ADC and Andrew doesn't mean consolidation has been ruled out.

Andrew knows consolidation is occurring in the industry and will likely take advantage of merger opportunities, but just not right now, said Aspan.

A merger is likely on hold for the next year. As part of the merger termination agreement, Andrew would have to pay ADC $65 million if the company accepted an offer to combine within 12 months.

"We can never rule out a merger," said Andrew's Aspan.

ADC's Borman took a similar view: "Something could be done in the future," he told internetnews.com.

Even CommScope kept the door open, with company spokesperson Betsy Lambert emphasizing there are no plans to continue pursuing a merger with Andrew "for the present time."