Andrew Calls Off ADC Merger… For Now

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

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

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.

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

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

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.”

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