Fiber optics provider ADC Telecommunications Inc. Wednesday, seeking a boost in its efforts to create next-generation IP systems, acquired Westborough, Mass.-based Broadband Access Systems in an all-stock deal valued at about $2.25 billion.
The actual number of common stock shares to be issued will be based on an average of the common stock’s closing price for the five days prior to the transaction’s close, but the deal is subject to a collar on ADC’s common stock value of no less than $34.127 and no more than $41.711.
ADC anticipates the transaction will close by calendar year-end and will account for it as a pooling of interests. The company expects to take an earnings hit of 2 cents a share in fourth quarter 2000, 7 to 8 cents for all of fiscal year 2000 and 5 to 6 cents in fiscal 2001. But, beginning in 2002, the company said the acquisition should be accretive, with Chief Financial Officer Robert Switz declaring revenues from the acquisition could be about $500 million by 2004 or 2005.
ADC, which provides fiber optics, network equipment, software and integration services, has been in an acquisitive frenzy all year, with five announced or completed mergers just this summer. On Monday it completed the acquisition of British company Computer Telecom Installations Ltd., which offers installation, commissioning, integration and maintenance of telecommunications networks and equipment. In August, the company announced it would acquire wireless and wireline services provider France Electronique. In July, the company completed the acquisition of Centigram Communications for about $200 million. And, In June, it completed the acquisition of rival PairGain Technologies for about $1.6 billion. In all, including Wednesday’s deal, ADC will have spent nearly $5 billion on acquisitions this year.
BAS, a privately-held company, is a supplier of award-winning next-generation IP access platforms which enable communications service providers to deliver high-speed Internet access and IP-based voice services. Although BAS’ technologies are currently aimed at the cable market, Arun Sobti, senior vice president of ADC and president of ADC’s Broadband Access and Transport Group, said there are synergies with ADC’s DSL and wireless platforms.
“Broadband Access System’s products will form the cornerstone of ADC’s strategy to offer next-generation, Internet Protocol systems for the delivery of Internet and voice services over broadband networks,” Sobti said. “Clearly, next-generation networks are being built with IP as their foundation. This acquisition provides ADC and its customers with a carrier-class, high-performance IP platform to successfully deliver broadband communications services.”
