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ADC Sells Metrica to OSS Rival

Light Reading
News Analysis
Light Reading
10/25/2004

ADC Telecommunications Inc. (Nasdaq: ADCT) has finally offloaded its Metrica OSS unit. As predicted earlier this month, ADC has agreed to sell the business to WatchMark-Comnitel, Metrica's main rival in the wireless performance management market (see Where's Metrica Going? and ADC to Sell Metrica Unit).

ADC is getting $35 million in cash and 3.2 million WatchMark-Comnitel (WC) shares, which account for less than 5 percent of the total stock. Neither party will say how much the 3.2 million shares are worth, but one industry insider, who requested anonymity, suggested it was somewhere in the low single-digit millions of dollars.

That estimate, which would value the deal at $40 million if the stock's worth $5 million, would be in line with the general value of OSS acquisitions at present (between one and one-and-a-half times annual revenues). The Metrica business is on course to generate $28 million in revenues in ADC's current financial year, which ends this week.

The deal, which is expected to close in the next 60 days, marks the departure of ADC from the software systems market as it focuses on broadband infrastructure (see ADC Jumps on Krone and ADC Takes a Hit). Earlier this year it sold its billing business for $74.5 million, meaning ADC has raised more than $105 million from its two OSS lines (see Intec Buys ADC Billing Unit). ADC says it has now "completed the divestitures we needed to make" as part of its refocus.

For the complete story, go to Next-Generation Services.

— Ray Le Maistre, International News Editor, Light Reading

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