HICKORY, N.C.—CommScope Inc. has shaken up ADC Telecommunications Inc.’s bid to buy Andrew Corp. with a $9.50 per share proposal valued at about $1.7 billion in cash, including the assumption of $186 million in debt.
Based on Friday’s closing stock price of $12.22 per share, CommScope estimates that its offer represents a premium of approximately 36 percent over the $6.97 per share offer ADC proposed for Andrew’s assets in late May.
In a letter sent to Andrew chief Ralph Faison, CommScope’s Chairman and CEO Frank Drendel claimed that combining the two businesses “is a compelling strategic fit that will build upon Andrew’s and CommScope’s highly complementary operating assets.”
Regarding ADC’s offer, Drendel’s letter states, “We believe our proposal is superior, both financially and strategically, to the offer contemplated in your merger agreement with ADC Telecommunications Inc.”
And to set a fire under the issue, Drendel’s letter stipulates that CommScope’s offer expires at 5:00 p.m. Eastern Time Friday.
CommScope explained that it expects a combined company to lead the pack in terms of “last-mile” communications technology. CommScope said the deal will lead to annual cost savings of around $30 million to $50 million in the first full year after completion of the transaction, and around $70 million to $90 million in the second full year after completion.
“We believe that our all-cash proposal is extremely compelling for Andrew shareholders and provides Andrew shareholders superior value over that contemplated by the existing merger agreement with ADC,” stated Drendel in a press release. “Under our proposal, Andrew shareholders will receive a substantial cash premium for their shares without the significant uncertainties inherent in ADC’s proposed stock-for-stock merger transaction. We believe that Andrew’s Board of Directors and shareholders will find our all-cash proposal superior to the ADC transaction.”
Andrew spokesman Rick Aspan said only that the company is evaluating CommScope’s proposal and will respond at an appropriate time.
An ADC spokesperson didn’t respond to requests for comment.
