HICKORY, N.C. – CommScope, Inc. announced Monday a competing bid for Andrew Corporation for US$9.50 per share in cash, or US$1.7 billion.
The all-cash offer is a premium of approximately 36% over the US$6.97 per share value Andrew’s shareholders would receive under the existing merger agreement between Andrew and ADC Telecommunications based on the closing price of ADC’s common stock on August 4, 2006, the last trading day before CommScope’s proposal was made public, says the CommScope press release. CommScope’s proposal also represents a premium of approximately 20% over Andrew’s per share closing price of $7.89 on August 4, 2006.
The proposal, which was unanimously approved by CommScope’s Board of Directors, is valued at approximately $1.7 billion, including assumption of approximately $186 million of Andrew net debt. "This represents aggregate additional consideration of approximately $404 million over the current value provided to Andrew’s shareholders under the existing ADC/Andrew merger agreement," says the press release.
"CommScope expects the combined company to be a leader in virtually every aspect of ‘last mile’ communications: structured cabling solutions for the business enterprise, broadband cable for HFC applications and wireless communications infrastructure," says the press release.
"In addition to the compelling strategic fit of Andrew and CommScope, the combination of the companies’ respective operations is expected to result in meaningful sales, operating and cost synergies. CommScope has a strong global track record of managing its businesses to create shareholder value. Moreover, CommScope’s executive management team has extensive experience in all the product areas in which Andrew currently operates. Given CommScope’s manufacturing discipline and commitment to operational excellence, and based on its review of publicly available information, the Company expects to achieve annual cost savings of approximately $30 million to $50 million in the first full year after completion of the transaction and approximately $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," said Frank Drendel, CommScope’s chairman and CEO, in the 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. For CommScope shareholders, we believe this transaction represents a unique opportunity to become even more competitive and profitable, with an even stronger and more diverse revenue stream. We look forward to Andrew’s board and management team carefully considering our all-cash proposal and moving quickly with them towards a definitive merger agreement."
