ADC to acquire LGC Wireless

October 24, 2007 -- ADC has agreed to acquire LGC Wireless, a provider of in-building wireless coverage and capacity platforms for carriers and enterprises.

October 24, 2007 -- ADC has agreed to acquire LGC Wireless, a provider of in-building wireless coverage and capacity platforms for carriers and enterprises. ADC says the acquisition represents a central part of its "All IP Radio Access Network (IP RAN)" strategy, announced earlier this year.

LGC's network systems mobile switching and wireless office platforms are expected to augment ADC's existing outdoor solutions. ADC says the acquisition will enhance and add scale to its existing line of wireless capacity and coverage solutions in a fast-growing market, and will also support the company's long-term goal of being among the leading global providers of network infrastructure solutions.

"This acquisition fits well with our strategy for capturing the strong growth potential of the wireless capacity and coverage market," comments Robert E. Switz, president and CEO of ADC. "Acquiring LGC Wireless further diversifies our revenue base by more than doubling our wireless business to over 9% of total ADC sales and will increase ADC's overall growth rate. This acquisition is expected to be non-dilutive to earnings per share in fiscal 2008 and accretive thereafter, excluding acquisition-related charges, acquired intangibles amortization and stock option expense."

LGC Wireless had sales of $83 million in the last 12 months ended September 30, 2007 compared to sales of $43 million in the year ended December 31, 2006. The company has approximately 240 employees. A presentation describing the strategic acquisition can be obtained here.

"The strategic value of this acquisition is created from combining ADC's advanced outdoor wireless solutions, global scale, worldwide customer base, and innovations in connectivity with LGC Wireless' advancements and market leadership in the in-building wireless solutions market," continues Switz. "The transaction thereby creates a leading platform for serving carriers' capacity and coverage needs."

According to a press release, ADC has agreed to acquire LGC Wireless for a total valuation of approximately $169 million. This includes a purchase price for the outstanding equity interests of LGC for approximately $148.5 million. Under the transaction ADC has agreed to pay cash for all the shares of LGC outstanding at the time of the closing. Option holders of LGC shares will be given the opportunity to either receive a cash payment for their options or an exchange of the options for options to acquire ADC shares. If all of the LGC optionholders elect to exchange their options for options to acquire ADC shares, then ADC would pay approximately $136 million in cash and issue options to acquire ADC shares worth approximately $12.5 million. ADC also will assume certain transaction expenses, LGC employee bonuses and the assumption of LGC's current debt, in aggregate approximately $20.5 million.

"ADC has a long history in wireless coverage and capacity solutions with important digital wireless intellectual property. We have been investing in a portfolio of new products built on a vision of the next-generation radio access network," adds ADC's Switz. "We are building and marketing IP radio access nodes and distributed antenna systems for several important application areas: the home, business and outdoor venues, such as campuses, public sites and hard-to-serve areas like tunnels and canyons. These products are designed to address both coverage and capacity for emerging data and video intensive wireless handsets while providing attractive economics for carriers."

The transaction is expected to close during the next 30 to 90 days. Closing of the transaction is subject to approval by necessary regulatory authorities as well as customary closing conditions. After closing the transaction, ADC expects to take a charge for various acquisition-related expenses, the amount of which has not been determined. Excluding this charge and future amortization of acquired intangibles and stock option expense, ADC expects the acquisition to be non-dilutive to earnings per share from continuing operations in fiscal 2008 and around $0.02-0.04 accretive in fiscal 2009.

"I am excited at this opportunity to merge LGC Wireless into ADC and strengthen our leadership in the advancement of next-generation wireless coverage and capacity solutions for communications operators and enterprises worldwide," comments Ian Sugarbroad, president and CEO of LGC Wireless. "ADC has a strong financial and market position, solid intellectual property and the global reach of sales into more than 130 countries. LGC has market leadership in in-building wireless capacity and coverage solutions. The combined entities will have the resources, distribution and support to make our combined offerings the best available wireless solutions for our customers worldwide."

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