LONDON Having rejected a $1.5 billion offer last year, CommScope Inc. has succeeded with a $2.6 billion offer for wireless infrastructure rival Andrew Corporation.
Last August the CommScope offer was rejected by the Westchester, Illinois based antenna specialist as "wholly inadequate." Andrew also rebuffed at the same time the advances of another communications equipment conglomerate, ADC Telecommunications.
Hickory, N.C.-based CommScope said it will pay $15 a share for Andrew, which represents a 16 percent premium on Andrews closing stock price. At least 90 percent of the payment will be cash.
The transaction is expected to close by the end of 2007.
The combined company will have more than 2,200 global patents and pending patent applications and approximately 16,000 employees serving more than 130 countries, with several R&D and manufacturing facilities in Europe.
Based on CommScope's and Andrew's results for fiscal year 2006, on a pro forma basis, the combined companies would have had sales of approximately $3.8 billion, about 35 percent in wireless antenna and cable products; 29 percent in carrier and network solutions; 21 percent in enterprise products; and 15 percent in broadband/cable television solutions.
Just over 57 percent of the revenues would be in North America; 24 percent in Europe, the Middle East and Africa; 12 percent in Asia/Pacific Rim; and 7 percent in Latin America.
The companies said the deal would help them cut manufacturing costs and diversify their customer base.
They added the combination of the two would help trim procurement costs for copper and plastic, since both make coaxial cables, used for cable TV as well as high-speed Internet services.
They also anticipate being able to make savings, excluding one-time items, of around $90 million to $100 million in the second year after the deal is completed. About $50 million to $60 million of savings are expected in the first full year.
Following the close of the transaction, Andrew will become a wholly-owned subsidiary of CommScope. Frank Drendel will remain Chairman and CEO of CommScope, and CommScope will retain its global headquarters in Hickory, North Carolina. The combined company said it plans to maintain its Chicago-area presence, and build upon Andrew's manufacturing and office facility in Joliet, Illinois.
In Europe, originally producing multi-band microwave antennas, Andrew's Lochgelly, Scotland facility now manufactures foam coaxial cable, microwave transmission lines, cable assemblies, and connectors mainly for the European and Middle Eastern markets.
The Brno, Czech Republic plant makes base station and terrestrial microwave antennas and cable assemblies for the European market.
Most of Andrew Corp's in-building and distributed antenna systems are made in and distributed from European plants in Buchdorf, Germany; Capriate and Faenza, Italy; and Pardubice, Czech Republic.