Tyco Electronics plans to buy ADC Telecommunications, a provider of broadband equipment to telcos, wireless carriers, cable operators and large enterprises, in a deal valued at about $1.25 billion.
ADC's service provider customers include Comcast, Cox Communications, AT&T, Verizon, Bell Canada, Sprint Nextel and Qwest. With the acquisition of ADC, Tyco Electronics' Network Solutions segment will target broadband connectivity products to carrier and enterprise networks.
"Consumers and enterprises want access to high-speed video and data wherever they are, on whatever devices they are using -- from smart phones to HD and 3D televisions to computers with advanced video-conferencing capabilities," Tyco Electronics CEO Tom Lynch said in announcing the deal. "The combination of ADC and Tyco Electronics creates an industry leader, with the scope and geographic scale to help customers deliver needed capacity, from the core of the network all the way to the end user."
Tyco Electronics called out ADC's Distributed Antenna System mobile data solutions for carrier and enterprise customers as a key asset. Additionally, Tyco Electronics will add ADC's professional services organization in the U.S. to its business.
The deal is subject to usual closing conditions, including the tender of a majority of ADC shares and regulatory approvals, and is expected to close in the fourth calendar quarter 2010. Tyco Electronics expects ADC to be accretive to earnings in the first year and to reach its target operating margin of 15% in the third year after the acquisition.
Tyco Electronics had fiscal 2009 revenue of $10.3 billion. The company's businesses span industries including automotive, data communication systems and consumer electronics, telecommunications, aerospace, defense and marine, medical, energy and lighting.
Minneapolis-based based ADC, which had $1.9 billion in sales for fiscal 2009, has approximately 9,000 employees worldwide.
Tyco Electronics was advised in the transaction by Barclays Capital. ADC was advised by Morgan Stanley.
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