NAPERVILLE, Ill. and PETALUMA, Calif., Sept. 7 /PRNewswire-FirstCall/ --
Tellabs (Nasdaq: TLAB), a leader in bandwidth management and optical
transport, and AFC (Nasdaq: AFCI), a leader in access, have amended the terms
of the companies' merger agreement announced on May 20, 2004.
Under the terms of the amended agreement, which was approved today by both
companies' boards of directors, AFC stockholders will receive 0.504 shares of
Tellabs common stock and $12.00 in cash for each AFC share. The original
exchange ratio was 1.55 Tellabs shares and $7.00 in cash for each AFC share.
Based on today's closing price for Tellabs' stock, the revised exchange ratio
represents $16.60 in value per AFC share, or a total value of approximately
As previously announced, following AFC's release of its second-quarter
results and outlook, the Tellabs board of directors requested that Tellabs'
management conduct a further review and analysis of AFC's business and
financial outlook. In light of that review, the market reaction to AFC's
release, and the prospects for completing the merger on the previously
announced terms, and in order to increase the likelihood that the merger would
be consummated on terms fair to the stockholders of both companies, the two
companies agreed to amend their merger agreement.
Upon completion of the transaction, Tellabs' stockholders will own
approximately 90% of the company and AFC stockholders will own 10%. Including
synergies, Tellabs expects the transaction to be accretive to full-year 2005
pretax income on a per-share basis, excluding amortization associated with
acquired intangibles and other purchase accounting adjustments.
"The strategic rationale for combining Tellabs and AFC on the revised
terms remains compelling," said Krish Prabhu, president and chief executive
officer of Tellabs. "We look forward to serving our customers better with the
combined strengths of both companies."
"Both companies agreed that it was in our mutual interest to revise the
deal terms," said John Schofield, chairman, president and CEO of AFC. "Our
stockholders will receive a larger proportion of the merger consideration in
cash, while still participating in the anticipated strategic benefits of the
merger. We believe this merger is the right decision for AFC's shareholders."
Upon completion of the transaction, John Schofield will become vice
chairman of the Tellabs board of directors, which will be expanded to 10
The transaction is subject to certain closing conditions, including
clearance by the U.S. Securities & Exchange Commission (SEC) of the
proxy/prospectus relating to the transaction and approval by AFC stockholders.
Approval by Tellabs' stockholders is not required under the new terms.
Because the revised mix of stock and cash currently does not meet requirements
for a tax-free transaction, the merger is expected to be structured as a
taxable transaction. The companies previously announced that the Federal
Trade Commission had granted early termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act for the merger. Subject to
satisfaction of closing conditions, the companies currently expect the merger
to close before year-end 2004.
Simultaneous Webcast and Teleconference Replay -- Tellabs and AFC will
host an investor teleconference at 7:30 a.m. Central time on Wednesday, Sept.
8, to discuss the amended merger. To access the teleconference, dial 706-679-
3667. Internet users can hear a simultaneous webcast of the teleconference at
http://tellabs.com ; click on the webcast icon. A taped replay of the call
will be available beginning at approximately 9 a.m. Central time on Wednesday,
Sept. 8, until 9 a.m. Central time on Friday, Sept. 10, at 800-633-8284.
(Outside the United States, call 402-977-9140.) When prompted, enter the
Tellabs-AFC reservation number: 21207530.
About Tellabs -- Headquartered in Naperville, Ill., Tellabs delivers
technology that transforms the way the world communicates(TM). Tellabs experts
design, develop, deploy and support our solutions for telecom service
providers in more than 100 countries. More than two-thirds of telephone calls
and Internet sessions in several countries, including the United States, flow
through Tellabs equipment. Our product portfolio provides solutions in next-
generation optical networking, managed access, carrier-class data, voice
quality enhancement and cable telephony. For details, see
About AFC -- Headquartered in Petaluma, Calif., AFC is a leading provider
of broadband access solutions for the global telecommunications industry. With
a customer base of more than 800 service providers worldwide, AFC continues to
build and support the world's evolving broadband access network architecture.
For more information, please visit AFC online at http://www.AFC.com or call
Forward-Looking Statements -- Additional Information and Where to Find It
This communication is not a solicitation of a proxy from any security
holder of Tellabs, Inc. or Advanced Fibre Communications, Inc. Tellabs, Inc.
plans to file with the Securities and Exchange Commission an amendment to its
Registration Statement on SEC Form S-4, and Advanced Fibre
Communications, Inc. expects to mail a Proxy Statement/Prospectus to its
stockholders concerning the proposed merger of Advanced Fibre Communications,
Inc. with a subsidiary of Tellabs, Inc. WE URGE INVESTORS AND SECURITY HOLDERS
TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE
FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders will be able to obtain the documents free of
charge at the SEC's website, http://www.sec.gov . In addition, documents
filed with the SEC by Tellabs, Inc. will be available free of charge from
Tellabs Investor Relations, 1415 West Diehl Road, Naperville, IL 60563, 630-
798-8800. Documents filed with the SEC by Advanced Fibre Communications, Inc.
will be available free of charge from Advanced Fibre Communications Investor
Relations, 1465 North McDowell Blvd., Petaluma, CA, USA 94954, 707-792-3500.
Interest of Certain Persons in the Merger.
Advanced Fibre Communications, Inc., and its directors and executive
officers and other members of its management and employees, may be deemed to
be participants in the solicitation of proxies from the stockholders of
Advanced Fibre Communications, Inc. in connection with the merger. The
directors and executive officers of Advanced Fibre Communications, Inc. have
interests in the merger, some of which may differ from, or may be in addition
to, those of the respective stockholders of Advanced Fibre Communications,
Inc. generally. Those interests will be described in greater detail in
the Proxy Statement/Prospectus with respect to the merger, which may include
potential membership on the Tellabs, Inc. Board of Directors, option and stock
holdings and indemnification. Information about the directors and executive
officers of Advanced Fibre Communications, Inc. and their ownership of
Advanced Fibre Communications, Inc. stock is set forth in the proxy statement
for Advanced Fibre Communications, Inc.'s 2004 annual meeting of stockholders.
Investors may obtain additional information regarding the interests of the
participants by reading the proxy statement/prospectus when it becomes
NOTICE TO INVESTORS, PROSPECTIVE INVESTORS AND THE INVESTMENT COMMUNITY --
CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Statements in this press release regarding the proposed merger of Tellabs,
Inc. and Advanced Fibre Communications, Inc. which are not historical facts,
including expectations of financial results for the combined companies (e.g.,
projections regarding revenue, earnings, cash flow and cost savings), are
"forward-looking statements." Forward-looking statements are not guarantees
of future performance and involve risks, uncertainties and other factors that
may cause either company's actual performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by those statements. Either company's actual future results could
differ materially from those predicted in such forward-looking statements.
Investors and security holders are cautioned not to place undue reliance on
these forward-looking statement and any such forward-looking statements are
qualified in their entirety by reference to the following cautionary
Important factors upon which the forward-looking statements presented in
this release are premised include: (a) receipt of regulatory and stockholder
approvals without unexpected delays or conditions; (b) timely implementations
and execution of merger integration plans; (c) retention of customers and
critical employees; (d) economic changes impacting the telecommunications
industry; (e) successfully leveraging Tellabs/Advanced Fibre Communications'
comprehensive product offering to the combined customer base; (f) the
financial condition of telecommunication service providers and equipment
vendors, including any impact of bankruptcies; (g) the impact of customer and
vendor consolidation; (h) successfully introducing new technologies and
products ahead of competitors; (i) successful management of any impact from
slowing economic conditions or customer demand; and (j) protection and access
to intellectual property, patents and technology. In addition, the ability of
Tellabs/Advanced Fibre Communications to achieve the expected revenues,
accretion and synergy savings also will be affected by the effects of
competition (in particular the response to the proposed transaction in the
marketplace), the effects of general economic and other factors beyond the
control of Tellabs/Advanced Fibre Communications, and other risks and
uncertainties described from time to time in Tellabs/Advanced Fibre
Communications' public filings with the Securities and Exchange Commission.
Tellabs and Advanced Fibre Communications disclaim any intention or obligation
to update or revise any forward-looking statements.
AFC, Inc., AFC and the AFC logo are registered trademarks of AFC, Inc. The
Acronym for Access is a service mark of AFC, Inc.
Tellabs(R), Tellabs logo(R) and technology that transforms the way the
world communicates are trademarks or registered trademarks of Tellabs or one
of its affiliates in the United States and/or other countries. Any other
trademarks are the property of their respective owners.
SOURCE Tellabs; AFC