Acquisition sparks new life for Reliance Comm/Tec
BEN HARRISON
With the ink still wet on corporate acquisition papers, Reliance Comm/Tec in Cleveland is taking on new life and economic energy for new international markets. As a result of its acquisition, the company expects to increase its share of the fiber-to-the-home equipment market.
Reliance Comm/Tec, which reported $458 million in sales last year, is being acquired by Kohlberg Kravis Roberts and Co., a subsidiary of K-Tec Holdings Inc. in New York and Menlo Park, CA. Rockwell International Corp., Seal Beach, CA, will be dropping Reliance Comm/Tec from its corporate ledger in a $475 million deal. (See Lightwave, July 1995, page 3.) The purpose of the acquisition is to finance the growth of Reliance Comm/Tec, according to a Kohlberg Kravis Roberts and Co. spokesperson.
One analyst`s view of the acquisition comes from Stephen Montgomery, vice president and chief operating officer at Electronicast Corp., a San Mateo, CA, consultancy. "I see this move as part of a national acquisition trend that reflects the desires of customers to seek a single-source provider for all of their networking needs. Northern Telecom, AT&T and 3M are also closing deals to make them single-source providers."
A different viewpoint is expressed by Michael Howard, president at San Jose-based Infonetics Research Inc. He sees Rockwell as more data-oriented, and he views the business decision to sell Comm/Tec as a move that is consistent with Rockwell`s overall goals. Comm/Tec was not a fit for Rockwell, whose strategic initiatives focus on the use of personal computers and fax modems for multimedia and wireless semiconductor-based applications.
Howard says, "There is certainly a trend in many companies to converge telecommunications and data communications under the business leadership of in formation services managers. It re mains to be seen if the new ownership will provide Comm/Tec with all the resources it requires."
Commenting on the acquisition, Dudley P. Sheffler, president at Comm/Tec, says, "This new partnership provides us with the necessary support and resources to capitalize further on the rapidly growing global telecommunications market. The Reliance portion of our company`s name will be dropped, and Comm/Tec will become our corporate name." Comm/Tec will become a private company because Kohlberg Kravis Roberts is a private investment concern.
International-market expansion
As a result of the acquisition, Sheffler foresees dramatic expansion for Comm/Tec in its international markets. "We are working on a new joint venture program in India, two new joint ventures in China and new programs in South America. These new activities are not impacting our domestic U.S. business; in fact, they are directly supportive of our U.S. customers," he says. "Punjab Communications Ltd., the proposed company in India--like the joint venture concerns we`ve recently announced in the People`s Republic of China--illustrates our international move.
"We are not cutting back on people or facilities; we are actually adding manpower and experiencing double-digit growth. In 1995, we are projecting the largest capital plan for growth that we have ever had, and the future looks even better," he adds.
Comm/Tec will become a stand-alone company with its own board of directors and will continue its operations in Lorain, OH, Franklin Park, IL, Bedford, TX, and North Ridgeville, OH. It provides power, connection, protection, enclosure, transmission and loop test products, systems, and turnkey service support to telecommunications companies servicing the local subscriber loop. Comm/Tec became part of Rockwell as a result of Rockwell`s acquisition of Reliance Electric last year.
However, since 1986, Comm/Tec has been active in the communications marketplace. It has formed organizations that focus on advanced fiber systems, multimedia products, network services and engineered systems. For example, Comm/Tec has acquired Poynting Inc., a Scottsdale, AZ, research and development company proficient in synchronous optical network applications. Comm/Tec has also introduced its Matrix interactive multimedia access platform, Discs digital-loop carrier system; modular and cellular power systems; remote terminals, and electronics enclosures.
Among the company`s customers are the regional Bell operating companies, independent telephone companies and other network providers from the cellular, competitive access and cable-TV industries.
Business units include Lorain Products, Reliable Electric and Transmission Systems. Lorain Products provides high-density modular direct-current power systems, rectifiers, DC/DC converters, inverters, ringing/signaling equipment and special service power supplies.
Reliable Electric provides electrical protection for the telecommunications industry. Among its 3000 products are central office connectors and frame systems, buried and aerial distribution terminals, fiber-optic splicing closures, building entrance terminals, sealed insulation displacement connection blocks, crossconnect systems and sealed cable splicing closures.
Transmission Systems products include interactive multimedia systems, analog products and test systems. Poynting Systems, part of the Transmission Systems Division, focuses on asynchronous transfer mode and interactive television technology research, as well as developing video dial-tone networks for telephone, cable and other service providers.
Another component of Transmission Systems, designated as Test Systems, offers worldwide communication testing for local-loop transmission capability. q