Tellabs and AFC Amend Merger Terms
08 September 2004 - 9:12AM
PR Newswire (US)
Tellabs and AFC Amend Merger Terms NAPERVILLE, Ill. and PETALUMA,
Calif., Sept. 7 /PRNewswire-FirstCall/ -- Tellabs (NASDAQ:TLAB), a
leader in bandwidth management and optical transport, and AFC
(NASDAQ:AFCI), a leader in access, have amended the terms of the
companies' merger agreement announced on May 20, 2004. Under the
terms of the amended agreement, which was approved today by both
companies' boards of directors, AFC stockholders will receive 0.504
shares of Tellabs common stock and $12.00 in cash for each AFC
share. The original exchange ratio was 1.55 Tellabs shares and
$7.00 in cash for each AFC share. Based on today's closing price
for Tellabs' stock, the revised exchange ratio represents $16.60 in
value per AFC share, or a total value of approximately $1.5
billion. As previously announced, following AFC's release of its
second-quarter results and outlook, the Tellabs board of directors
requested that Tellabs' management conduct a further review and
analysis of AFC's business and financial outlook. In light of that
review, the market reaction to AFC's release, and the prospects for
completing the merger on the previously announced terms, and in
order to increase the likelihood that the merger would be
consummated on terms fair to the stockholders of both companies,
the two companies agreed to amend their merger agreement. Upon
completion of the transaction, Tellabs' stockholders will own
approximately 90% of the company and AFC stockholders will own 10%.
Including synergies, Tellabs expects the transaction to be
accretive to full-year 2005 pretax income on a per-share basis,
excluding amortization associated with acquired intangibles and
other purchase accounting adjustments. "The strategic rationale for
combining Tellabs and AFC on the revised terms remains compelling,"
said Krish Prabhu, president and chief executive officer of
Tellabs. "We look forward to serving our customers better with the
combined strengths of both companies." "Both companies agreed that
it was in our mutual interest to revise the deal terms," said John
Schofield, chairman, president and CEO of AFC. "Our stockholders
will receive a larger proportion of the merger consideration in
cash, while still participating in the anticipated strategic
benefits of the merger. We believe this merger is the right
decision for AFC's shareholders." Upon completion of the
transaction, John Schofield will become vice chairman of the
Tellabs board of directors, which will be expanded to 10 directors.
The transaction is subject to certain closing conditions, including
clearance by the U.S. Securities & Exchange Commission (SEC) of
the proxy/prospectus relating to the transaction and approval by
AFC stockholders. Approval by Tellabs' stockholders is not required
under the new terms. Because the revised mix of stock and cash
currently does not meet requirements for a tax-free transaction,
the merger is expected to be structured as a taxable transaction.
The companies previously announced that the Federal Trade
Commission had granted early termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act for the
merger. Subject to satisfaction of closing conditions, the
companies currently expect the merger to close before year-end
2004. Simultaneous Webcast and Teleconference Replay -- Tellabs and
AFC will host an investor teleconference at 7:30 a.m. Central time
on Wednesday, Sept. 8, to discuss the amended merger. To access the
teleconference, dial 706-679- 3667. Internet users can hear a
simultaneous webcast of the teleconference at http://tellabs.com/ ;
click on the webcast icon. A taped replay of the call will be
available beginning at approximately 9 a.m. Central time on
Wednesday, Sept. 8, until 9 a.m. Central time on Friday, Sept. 10,
at 800-633-8284. (Outside the United States, call 402-977-9140.)
When prompted, enter the Tellabs-AFC reservation number: 21207530.
About Tellabs -- Headquartered in Naperville, Ill., Tellabs
delivers technology that transforms the way the world
communicates(TM). Tellabs experts design, develop, deploy and
support our solutions for telecom service providers in more than
100 countries. More than two-thirds of telephone calls and Internet
sessions in several countries, including the United States, flow
through Tellabs equipment. Our product portfolio provides solutions
in next- generation optical networking, managed access,
carrier-class data, voice quality enhancement and cable telephony.
For details, see http://www.tellabs.com/ . About AFC --
Headquartered in Petaluma, Calif., AFC is a leading provider of
broadband access solutions for the global telecommunications
industry. With a customer base of more than 800 service providers
worldwide, AFC continues to build and support the world's evolving
broadband access network architecture. For more information, please
visit AFC online at http://www.afc.com/ or call 1-800-690-AFCI.
Forward-Looking Statements -- Additional Information and Where to
Find It This communication is not a solicitation of a proxy from
any security holder of Tellabs, Inc. or Advanced Fibre
Communications, Inc. Tellabs, Inc. plans to file with the
Securities and Exchange Commission an amendment to its Registration
Statement on SEC Form S-4, and Advanced Fibre Communications, Inc.
expects to mail a Proxy Statement/Prospectus to its stockholders
concerning the proposed merger of Advanced Fibre Communications,
Inc. with a subsidiary of Tellabs, Inc. WE URGE INVESTORS AND
SECURITY HOLDERS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY
OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders
will be able to obtain the documents free of charge at the SEC's
website, http://www.sec.gov/ . In addition, documents filed with
the SEC by Tellabs, Inc. will be available free of charge from
Tellabs Investor Relations, 1415 West Diehl Road, Naperville, IL
60563, 630- 798-8800. Documents filed with the SEC by Advanced
Fibre Communications, Inc. will be available free of charge from
Advanced Fibre Communications Investor Relations, 1465 North
McDowell Blvd., Petaluma, CA, USA 94954, 707-792-3500. Interest of
Certain Persons in the Merger. Advanced Fibre Communications, Inc.,
and its directors and executive officers and other members of its
management and employees, may be deemed to be participants in the
solicitation of proxies from the stockholders of Advanced Fibre
Communications, Inc. in connection with the merger. The directors
and executive officers of Advanced Fibre Communications, Inc. have
interests in the merger, some of which may differ from, or may be
in addition to, those of the respective stockholders of Advanced
Fibre Communications, Inc. generally. Those interests will be
described in greater detail in the Proxy Statement/Prospectus with
respect to the merger, which may include potential membership on
the Tellabs, Inc. Board of Directors, option and stock holdings and
indemnification. Information about the directors and executive
officers of Advanced Fibre Communications, Inc. and their ownership
of Advanced Fibre Communications, Inc. stock is set forth in the
proxy statement for Advanced Fibre Communications, Inc.'s 2004
annual meeting of stockholders. Investors may obtain additional
information regarding the interests of the participants by reading
the proxy statement/prospectus when it becomes available. NOTICE TO
INVESTORS, PROSPECTIVE INVESTORS AND THE INVESTMENT COMMUNITY --
CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Statements in this press release regarding the proposed merger of
Tellabs, Inc. and Advanced Fibre Communications, Inc. which are not
historical facts, including expectations of financial results for
the combined companies (e.g., projections regarding revenue,
earnings, cash flow and cost savings), are "forward-looking
statements." Forward-looking statements are not guarantees of
future performance and involve risks, uncertainties and other
factors that may cause either company's actual performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by those
statements. Either company's actual future results could differ
materially from those predicted in such forward-looking statements.
Investors and security holders are cautioned not to place undue
reliance on these forward-looking statement and any such
forward-looking statements are qualified in their entirety by
reference to the following cautionary statements. Important factors
upon which the forward-looking statements presented in this release
are premised include: (a) receipt of regulatory and stockholder
approvals without unexpected delays or conditions; (b) timely
implementations and execution of merger integration plans; (c)
retention of customers and critical employees; (d) economic changes
impacting the telecommunications industry; (e) successfully
leveraging Tellabs/Advanced Fibre Communications' comprehensive
product offering to the combined customer base; (f) the financial
condition of telecommunication service providers and equipment
vendors, including any impact of bankruptcies; (g) the impact of
customer and vendor consolidation; (h) successfully introducing new
technologies and products ahead of competitors; (i) successful
management of any impact from slowing economic conditions or
customer demand; and (j) protection and access to intellectual
property, patents and technology. In addition, the ability of
Tellabs/Advanced Fibre Communications to achieve the expected
revenues, accretion and synergy savings also will be affected by
the effects of competition (in particular the response to the
proposed transaction in the marketplace), the effects of general
economic and other factors beyond the control of Tellabs/Advanced
Fibre Communications, and other risks and uncertainties described
from time to time in Tellabs/Advanced Fibre Communications' public
filings with the Securities and Exchange Commission. Tellabs and
Advanced Fibre Communications disclaim any intention or obligation
to update or revise any forward-looking statements. AFC, Inc., AFC
and the AFC logo are registered trademarks of AFC, Inc. The Acronym
for Access is a service mark of AFC, Inc. Tellabs(R), Tellabs
logo(R) and technology that transforms the way the world
communicates are trademarks or registered trademarks of Tellabs or
one of its affiliates in the United States and/or other countries.
Any other trademarks are the property of their respective owners.
DATASOURCE: Tellabs; AFC CONTACT: Investors, Tom Scottino,
+1-630-798-3602, , or Media, George Stenitzer, +1-630-798-3800, ,
both of Tellabs; Investors, Debbie McGowan, +1-707-794-7720, , or
Media, Teresa Novak, +1-707-793-4410, , both of AFC Web site:
http://www.tellabs.com/ http://www.afc.com/
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