Andrew Stays Single – For Now
In late May, ADC (Nasdaq: ADCT) announced an all-stock offer worth $2 billion for Andrew, and the two companies began the acquisition process, even getting antitrust clearance in early July. (See ADC to Buy Andrew for $2B and ADC, Andrew Make Progress.)
But ADC's share price slumped during June and July, and by early August the value of its takeover offer had nearly halved to around $1.14 billion.
That prompted a rival takeover offer from cable equipment vendor CommScope Inc. , which, like ADC, saw value in combining Andrew's wireless assets with existing fixed access infrastructure products. CommScope's bid, announced early this week, was all cash and worth about $1.7 billion, a significant premium over the current value of the ADC offer. (See CommScope Crashes ADC's Party.)
Now, though, Andrew and ADC have called off their planned merger, saying that "current market considerations raised serious questions about the ability to obtain necessary shareholder approval." (See ADC, Andrew End Merger Plan.)
Andrew also knocked back CommScope's offer of $9.50 in cash per share, calling the bid "wholly inadequate and not in the best interests of its shareholders." (See Andrew Rebuffs CommScope.)
In a prepared statement, Andrew's CEO Ralph Faison noted that CommScope's offer "does not adequately reflect the value of Andrew, its business prospects, and its industry-leading products, global customer base, and skilled global workforce.”
CommScope responded today: "We are disappointed that Andrew has decided to reject our proposal."
But Faison also left the door wide open to higher bids. "While we still believe in the convergence strategy, the merger of Andrew and ADC was only one method to execute against that," said the CEO.
If CommScope, or any other suitor, submits a higher and acceptable bid, ADC stands to gain. It is getting $10 million from Andrew to terminate its acquisition, and will be paid an extra $65 million "in the event Andrew effects a business combination transaction within 12 months."
The news, released late afternoon Wednesday, gave ADC's stock a boost. Having closed at $12.65, it climbed 60 cents, nearly 5 percent, to $13.25 in after-hours trading.
And the prospect of a higher bid edged Andrew's stock up 5 cents, about 0.5 percent, to $9.60 in after-hours trading.
CommScope's stock closed Wednesday trading at $28.17.
— Ray Le Maistre, International News Editor, Light Reading