Marlin Equity Partners has made another acquisition in the optical networking space, with an agreement to acquire network equipment maker Tellabs for $891 million (€647 million).
The price of $2.45 per share is a 4.3 percent premium on Tellabs’ share price on 18 October, the last trading day before the announcement. Tellabs’ board approved the deal, and Michael J. Birck, Tellabs’s co-founder and second-largest stockholder, says he supports the transaction. The takeover is expected to close before the end of the year.
The deal follows a strategic review of the company’s options, with more than 30 potential buyers contacted as part of the sale process, the company said in a statement. Tellabs said the takeover will enable it to invest in new technologies.
This is Marlin’s third deal in the optical networking sector. Earlier this year it acquired the optical networking business of Nokia Siemens Networks (NSN). It also acquired the intelligent optical switch business from Sycamore Networks, and the two companies have now been rolled into a single entity renamed Coriant. Although Marlin has not revealed its plans for Tellabs, Ron Kline, principal analyst, network infrastructure, at Ovum, expects Marlin to merge Tellabs with Coriant once the deal has closed.
“The greatest synergies would come from combining Tellabs with Coriant. That is not an easy task, but the alternative of leaving the companies to operate independently pits them against each other,” he said. While there is some overlap in optical networking technologies between the two vendors, e.g. ROADM and OTN switching, Coriant has been focused on the regional/core network while Tellabs has been focused in the metro, he notes.
Bob Leggett, an operating partner at Marlin, said: “As part of Marlin’s portfolio of telecommunications companies, the Tellabs business will expand and complement our existing set of customers and product offerings, allowing us to serve a broader market, harness a deeper pool of networking expertise, and create compelling cross-selling opportunities.”
By Pauline Rigby
Press release: Marlin Equity Partners to Acquire Tellabs
Press release: Tellabs to be Acquired by Marlin Equity Partners for $891 Million in Cash
Analyst view: Marlin buying spree continues with acquisition of Tellabs