Marlin adds to its optical transport assets with all-cash swoop for troubled Tellabs.

October 21, 2013

2 Min Read
Tellabs to Be Sold to Marlin for $891M

Tellabs has agreed to be acquired for $891 million in cash by emerging optical networking powerhouse Marlin Equity Partners.

The deal may help extend the life of the ailing optical equipment vendor, which has been seeking a buyer for a while, but it doesn't provide much value for investors, as the agreed price of $2.45 per share is only 10 cents higher than Friday's closing price of $2.35. (See Tellabs CFO Roundabout Gets Another Spin and Tellabs Axes Product, Cuts Jobs.)

News of the deal sent Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA)'s share price up by 5 percent to $2.47 in early morning trading.

For Marlin Equity Partners , the move cements its position as a serious and committed player in the optical equipment market, as the company has already snapped up Nokia Solutions and Networks (NSN)'s transport division and part of Sycamore Networks to form Coriant . (See Coriant Counts on NSN's Optical Strengths, Coriant Soaks Up Sycamore, Coriant Boasts 'SDN-Plus' System, and Sycamore + NSN Optical = Coriant.)

Now it is adding a business with annual revenues of between $800 million and $900 million and a mature customer base, including Verizon Communications Inc. (NYSE: VZ), where Tellabs is one of the operator's two preferred metro transport equipment suppliers alongside Fujitsu Network Communications Inc. The move will also give Marlin an optical access product line, some routers, in the form of Tellabs's 8800 and 8600 platforms and an expanded software-defined networking (SDN) pitch. (See Tellabs Boasts SDN 'Engagements'.)

If successful, the deal may represent something of a bargain for Marlin, as Tellabs has a substantial chunk of cash in the bank (more than $540 million at the end of the second quarter) so the investment firm may only be shelling out about $350 million net to add Tellabs to its optical stable.

It also comes as the optical sector is experiencing something of a resurgence, a trend that was represented in Ciena's most recent financial report. (See Ciena's Smith: Next-Gen Spending Has Tipped and WDM Market Grows 10 Percent.)

— Ray Le Maistre, Editor-in-Chief, Light Reading

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