This is technology M&A deal number 536 that ChannelE2E has covered so far in 2021. See all technology M&A deals for 2021 and 2020 listed here.
Dig into the deal details, and the reality is Adtran is acquiring ADVA in a deal valued at EUR789 million ($931.1 million), Market Watch notes.
Adtran, ADVA Merger Synergies (And Layoffs?)
Adtran develops fiber access, fiber extension and subscriber connectivity solutions. ADVA offers metro wavelength division multiplexing, data center interconnect, business Ethernet and network synchronization solutions. The combined businesses, to be known as Adtran Holdings, is expected to generate about $1.2 billion in combined revenue.
Neither Adtran nor ADVA explained how channel partners will potentially benefit from the deal -- though the resulting business will surely emphasize sales to communications service providers (CSPs).
Meanwhile, the merger may also involve some job cuts. The clue: Atran and ADVA say the business combination will deliver approximately $52 million in pre-tax annual "cost synergies" realized within two years post-closing. The "cost synergies" term sometimes is a euphemism for layoffs -- though it's unclear if or how many Adtran and/or ADVA layoffs could potentially occur.
Adtran-ADVA Networking Merger: Deal Details, Executive Leadership
After the merger is completed, Adtran shareholders will own approximately 54 percent of the combined company and ADVA shareholders will own approximately 46 percent. The deal is expected to close in the second or third quarter of 2022, subject to various regulatory approvals and other variables.
The combined company will be named Adtran Holdings Inc. The global headquarters will be located in Huntsville, Alabama and its European headquarters will be in Munich, Germany.
The new management team and Board of Directors will have a "balanced mix" of executives from both companies, the firms say. The leadership will include:
- Adtran Chairman and CEO Tom Stanton, and Adtran CFO Mike Foliano will remain in their current posts.
- ADVA CEO Brian Protiva will shift to executive vice chairman.
- ADVA CTO Christoph Glingener will remain CTO for the combined business.
Adtran-ADVA Networking Merger: Executive Perspectives
In a prepared statement about the deal, Stanton said:
“We are in the early stages of an unprecedented investment cycle in fiber connectivity, especially in the U.S. and Europe, fueled by the demand for last-mile fiber access and middle-mile transport to provide high-speed connectivity to homes, businesses and future 5G infrastructure. By joining forces, our combined firm’s portfolio will better position us to capitalize 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.”
“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. We are excited to join forces and create a world-class team with exceptional technology expertise and customer focus. 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.”
Adtran-ADVA Merger: Investor Concerns
Adtran and ADVA emphasized multiple market opportunities in their M&A announcement, but investors appeared unimpressed.
Indeed, Adtran's stock ($ADTN) fell roughly 16 percent when the deal was announced.
Still, Adtran has been growing ahead of the deal. Revenue was $143.2 million for the quarter ended June 30, 2021 -- up from $128.7 million in the corresponding 2020 quarter. Also, net income was $5.1 million -- up from $752,000 in the corresponding quarter last year.