Tellabs to be acquired for $891 million

California investment firm Marlin Equity Partners agreed to pay $2.45 a share in cash for Naperville, Illinois-based telecom equipment company Tellabs Inc.

Tellabs, founded in 1975, was one of the Chicago areas hottest public companies during the dot-com fueled telecom boom of the late 1990s. But Tellabs, like Motorola Inc., found itself on the losing end of a consolidating market for gear that makes up the backbone of big telecom networks. More recently, Tellabs suffered a blow when CEO Rob Pullen died at age 50 of colon cancer.

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"This transaction will deliver to Tellabs stockholders certainty of value and liquidity, immediately upon closing," Tellabs Chairman Vince Tobkin said in a statement issued this morning. "Tellabs' Board of Directors arrived at the decision to enter into a transaction with Marlin after a thorough review of Tellabs' strategic alternatives and after more than 30 potential buyers, both strategic parties and financial sponsors, were contacted as part of a competitive bidding process."

Tellabs co-founder Michael J. Birck, the company's second-biggest shareholder, supports the deal, according to the statement.

Marlin's offer is just a tiny premium to its Friday closing price of $2.35. The recent peak for the stock was about $9 per share in early 2010.

But Tellabs was one of the high-flying stocks of the 1990s, splitting five times between 1994 and 1999, when it topped out at about $70 per share, adjusted for splits.

Annual revenue fell 36 percent between 2010 and 2012, to just over $1 billion, as Tellabs lost ground to rivals. Sales peaked at $3.39 billion in 2000, when the company earned $731 million. Last year, it lost $172 million on $1.05 billion in revenue.

Marlin Equity partner Nick Kaiser said in the statement that "we view Tellabs' business as an ideal opportunity to capitalize on the growth in the telecom network equipment sector." He added that "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."

Address

One Tellabs Center, 1415 West Diehl Road
NAPERVILLE, IL 60563
United States

Website 

www.tellabs.com

Key stats and ratios

	Q2 (Jun '13)	2012
Net profit margin	-3.68%	-16.31%
Operating margin	-1.93%	-14.89%
EBITD margin	-	1.17%
Return on average assets	-2.03%	-8.84%
Return on average equity	-3.11%	-12.51%
Employees	2,525