The companies, based in the US and Germany respectively, said a merged company would be “stronger and more profitable”, and would be “poised to benefit from the unprecedented investment cycle in fibre”.
Adtran chairman and CEO Thomas Stanton (pictured, left), said: “We are in the early stages of an unprecedented investment cycle in fibre connectivity, especially in the US and Europe, fuelled by the demand for last-mile fibre access and middle-mile transport to provide high-speed connectivity to homes, businesses and future 5G infrastructure.”
Adva CEO Brian Protiva (pictured, right) added: “The business combination is an outstanding opportunity to leverage the complementary nature of our customers and product portfolios and the compatibility of our companies’ businesses and culture.”
The merger will be carried out by an all-stock transaction, with Adtran shareholders getting 54% of the merged company and Adva’s shareholders the other 46%.
Adtran’s share price on the Nasdaq went down sharply on the news, from closing at US$24.57 on Friday night to just $20.51 on Monday’s close. By contrast, Adva’s shares in Frankfurt went up sharply, from €12.88 on Friday to €15.00 on Monday, falling back to €14.20 at lunchtime today.
The combined company will be dual-listed on the Nasdaq and Frankfurt Stock Exchange, the companies said.
Adtran’s market cap is $996 million, while Adva’s is €720 million ($852 million), making a combined value of €1.85 billion.
The companies said the merger “combines Adtran’s global leadership in fibre access, fibre extension and subscriber connectivity solutions with Adva’s global leadership in metro wavelength division multiplexing, data centre interconnect, business ethernet and network synchronisation solutions”.
Stanton said: “By joining forces, our combined firm’s portfolio will better position us to capitalise on this highly compelling global opportunity. We expect the transaction will create significant long-term value for both companies’ stakeholders by increasing our scale and improving our ability to serve as a trusted supplier for customers worldwide.”
Protiva said: “Our shared vision and passion for innovative networking solutions will benefit our customers through an enhanced value proposition, including a fully integrated end-to-end architecture for enterprise, access and metro core markets.”
They said there would be “approximately $52 million in pre-tax annual cost synergies realised within two years post-closing, driven by identified supply chain efficiencies and operating model optimisation”.
If the merger goes ahead, subject to shareholders’ decisions and regulatory approval, the combination will be called Adtran Holdings, based in Huntsville, Alabama.
Stanton will be chairman and CEO of the combined entity, with Protiva as executive vice chairman. Adtran’s CFO, Mike Foliano, will remain in his current role and Adva’s CTO, Christoph Glingener, will serve in the same capacity for the combined entity.
The board of nine will have six designated by Adtran and three by Adva.
