Tellabs next Marlin Equity Partners buy

Marlin Equity Partners has made its next move in the optical communications market. The global investment firm says it has signed a definitive merger agreement to acquire optical transport system and switch vendor Tellabs (NASDAQ: TLAB) for $2.45 per share in cash, which translates into a total equity value of approximately $891 million on a fully diluted basis.

The price per share represents a premium of 4.3% over the closing share price on October 18, 2013, and 13.3% over the 180-day volume-weighted average closing share price as of the same day. It also represents a premium of 28.9% over the current 52-week-low closing share price, which occurred on April 17, 2013.

Tellabs currently provides packet-optical transport systems, routers and other equipment for mobile backhaul, as well as passive optical LAN equipment. This last product line represents a reinvention of its fiber to the home (FTTH) business which at one time had Verizon as a customer. The company has a global customer base.

“We are excited to back the Tellabs team and we view Tellabs’ business as an ideal opportunity to capitalize on the growth in the telecom network equipment sector,” said Nick Kaiser, a partner at Marlin. “We are committed to extending Tellabs’ market leadership by continuing to make significant investments in research and development, and in providing a superior customer experience.”

Assuming completion of the deal – and an affiliate of Marlin is required to begin a tender offer to acquire all outstanding shares of Tellabs’ outstanding common stock no later than November 1 – the latest deal will be the third acquisition Marlin Equity has made in the optical communications space. It purchased the intelligent optical switch business of Sycamore Networks late last year (see “Sycamore Networks shutting down, sells optical business for $18.75M”), then acquired Nokia Siemens Networks’ optical network systems assets (see “Nokia Siemens Networks to sell optical network hardware business to Marlin Equity Partners”). It renamed the Nokia Siemens Networks unit “Coriant” (see “Coriant unleashed as Marlin Equity Partners closes acquisition”) and rolled the Sycamore Networks assets into it. Marlin Equity has not discussed its plans for Tellabs, but with Coriant currently focused primarily on long-haul, the Tellabs products would expand Coriant’s scope.

"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,” Bob Leggett, an operating partner at Marlin, hinted. “Combined with Marlin’s deep operational expertise and financial support, we believe these capabilities will significantly strengthen our competitive market position.”

“This deal reinforces Marlin’s long-term commitment to the telecommunications market sector and the business potential we believe is being driven by the concurrent demand for high-bandwidth mobile, video, and cloud-based services and applications,” added Pat DiPietro, an operating partner at Marlin. “Tellabs has an exceptionally strong heritage of technology innovation and customer-centric solutions, and we look forward to working closely with the Tellabs team to enhance long-term value for its premier customer base.”

For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer’s Guide.