ADC Doubles Down on Wireless

ADC (Nasdaq: ADCT) is boosting its push into the wireless market with the proposed acquisition of LGC Wireless , announced today. (See ADC to Acquire LGC.)

The $169 million deal would include a $148.5 million cash offer for all shares of privately held LGC and $20.5 million to cover LGC's employee bonuses, LGC's debts, and some transaction expenses. ADC expects to close the deal in 30 to 90 days.

AGC's stock was down 20 cents (1.6%) at $18.73 in afternoon trading.

Best known for fiber access products, ADC also offers products for improving cellular coverage. Its IP-based radio access network (RAN) strategy is focused on the FlexWave Base Station System, shown at CTIA in March. (See ADC Launches IP RAN.)

LGC sells gear for improving indoor coverage in places like large spaces or structures -- skyscrapers and airports being two examples. Andrew is among the competitors there. ADC's most comparable product to date has been its Digivance line of distrubuted antenna systems, targeted primarily at the outdoor market.

LGC's sales were $83 million in the 12 months ended Sept. 30, so the deal would roughly double ADC's wireless revenues to about 9 percent of total sales.

LGC should bring in "gross margins significantly higher than our corporate average" and "growth rates that will exceed ADC's current and projected revenue growth rates," ADC chief executive Robert Switz said on a conference call this morning.

Still, the LGC deal wouldn't be accretive until 2009, and would be "non-dilutive" to earnings per share in 2008, ADC executives said in this morning's press release.

The fate of LGC's management team wasn't specified today, although Switz made it sound as if ADC would like to keep LGC's top staffers in place. "The plan is to move them in, pretty much as they are," he said.

— Craig Matsumoto, West Coast Editor, Light Reading

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