Advanced Fibre Communications to acquire North American Access, a Marconi subsidiary, for $240M in cash

January 5, 2004

2 Min Read

PETALUMA, Calif. -- Advanced Fibre Communications(R), Inc. (AFC(R)) (Nasdaq: AFCI) today announced the signing of a definitive agreement pursuant to which AFC will acquire North American Access (NAA), a business unit of Marconi Communications, Inc., a subsidiary of Marconi Corporation plc (London: MONI and Nasdaq: MRCIY). The proposed transaction supports AFC's business strategy to expand its optical access portfolio, and enhance its ability to serve the demands and requirements of large telecommunications carriers.

Under the terms of the agreement, AFC's subsidiary will acquire NAA for $240 million in cash and will purchase the assets of NAA's business. The transaction encompasses NAA's Bedford, Texas facility and its employees. Completion of the transaction -- which is subject to regulatory review and other customary closing conditions -- is expected to occur in the first quarter of 2004.

"This acquisition brings together two companies with long histories of success within the highly competitive access networking market," said John Schofield, chairman, president and CEO at AFC. "Collectively, AFC and North American Access possess a significant deployed base of field-proven broadband access solutions. We view the product lines from both companies to be complementary and intend to continue and enhance both to best serve a broad customer base."

Commenting on the transaction, Mike Parton, chief executive of Marconi Corporation plc, said: "We are delighted with this transaction, which is in line with our previously stated strategy to sell our North American Access business. The transaction will provide business continuity to the employees and customers of our North American Access activity. The purchase price reflects the business' strong technological heritage, solid customer base and significant operational performance improvements achieved over the last 12 months. The cash proceeds will enable us to continue to reduce group debt and the associated interest payments."

The addition of NAA's product portfolio enhances AFC's ability to deliver a more robust suite of fiber-based access network solutions. North American Access is an established provider of fiber-access solutions to regional Bell operating companies and large North American incumbent local exchange carriers. The business possesses the most widely deployed fiber-centric architectures in North America, with over four million lines of capacity and over one million deployed lines.

"Over the past year, North American Access' leadership team successfully streamlined its business and demonstrated the ability to regain and sustain profitability," added Schofield. "Based on the current profile of the business, we expect this acquisition to be accretive to AFC's earnings and cash flow in 2004, excluding acquisition-related charges."

Citigroup Global Markets acted as exclusive financial adviser to AFC, with respect to this transaction.

Advanced Fibre Communications Inc. (AFC)

Marconi Corp. plc

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like