Tellabs to Acquire AFC for $1.9 Billion in Cash and Stock Combines
Market Leaders in Transport and Access to Lead Industry Shift to
Broadband NAPERVILLE, Ill. and PETALUMA, Calif., May 20
/PRNewswire-FirstCall/ -- Tellabs , a leader in bandwidth
management and optical transport, and AFC , a leader in access,
today entered into a definitive agreement under which Tellabs will
acquire AFC. The combination creates an industry leader in
strategic access and transport solutions for the world's leading
telecom service providers. Under the terms of the transaction,
which was approved by both companies' boards of directors, AFC
stockholders will receive 1.55 shares of Tellabs common stock and
$7.00 in cash for each AFC share. Based on Tellabs' closing price
on May 19, 2004, this represents $21.24 in value per AFC share, or
a total value of $1.9 billion. Upon completion of the transaction,
Tellabs stockholders will own approximately 75% of the company and
AFC stockholders will own 25%. Including synergies, the transaction
is expected to be accretive to Tellabs' 2005 pretax income on a
per-share basis, excluding amortization associated with acquired
intangibles and other purchase accounting adjustments. "Together,
Tellabs and AFC create a strategic global telecom equipment
supplier that will lead the industry's shift to broadband data with
end-to-end access and transport solutions," said Krish Prabhu,
chief executive officer (CEO) and president of Tellabs. "Marrying
the leader in access with the leader in transport positions us to
grow with our customers in the industry's sweet spot of broadband
services. This will enable us to help customers simplify networks,
offer easier service provisioning and sharpen their competitive
edge." "We are excited about this strategic combination, which
creates a company with an expanded portfolio to take advantage of
carriers' growing investment and focus on alternative broadband
access markets such as fiber-to-the- premises and broadband
wireless," said John Schofield, chairman and CEO of AFC. "Our
comprehensive suite of innovative broadband access solutions will
gain growth opportunities through Tellabs' significant
international distribution channels, as well as their deep
relationships with regional Bells and large incumbent carriers."
Upon completion of the transaction, John Schofield will become
chief operating officer and a director of Tellabs. The Tellabs
board will be expanded to include three AFC directors, including
Schofield, increasing the size of Tellabs' board to 12 members. The
transaction is subject to certain closing conditions, including
regulatory approval and approval by Tellabs' and AFC's
stockholders. It is expected to close in the second half of 2004.
The combined company will employ about 4,100 people, including
nearly 1,000 in international locations. It will have research and
development centers in Illinois, California, Florida, Texas,
Virginia, Denmark and Finland, as well as 41 sales offices in 29
countries. Credit Suisse First Boston acted as financial advisor to
Tellabs and Sidley Austin Brown & Wood provided legal counsel
to Tellabs. Bear, Stearns & Co. Inc. acted as financial advisor
to AFC and Pillsbury Winthrop provided legal counsel to AFC.
Simultaneous Webcast and Teleconference Replay -- Tellabs and AFC
will host a teleconference for investors at 7:30 a.m. Central
Daylight Time on Thursday, May 20, to discuss the proposed
acquisition. To access the teleconference, dial 212-346-6474.
Internet users can hear a simultaneous live webcast of the
teleconference at tellabs.com and afc.com. A taped replay of the
call will be available until 5:00 p.m. Central time on May 25, at
800-633-8284. (Outside the United States, dial 402-977-9140.) When
prompted, enter the Tellabs/AFC reservation number: 21196127. 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 http://www.tellabs.com/. 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 1-800-690-AFCI.
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 a Registration Statement on SEC
Form S-4, and Tellabs, Inc. and Advanced Fibre Communications, Inc.
expect to mail a Joint Proxy Statement/Prospectus to their
respective 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 JOINT 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.
Tellabs, Inc. and Advanced Fibre Communications, Inc., and their
respective directors and executive officers and other members of
their management and employees, may be deemed to be participants in
the solicitation of proxies from the stockholders of Tellabs, Inc.
and Advanced Fibre Communications, Inc. in connection with the
merger. The directors and executive officers of Tellabs, Inc. and
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 Tellabs, Inc. and Advanced Fibre
Communications, Inc. generally. Those interests will be described
in greater detail in the Joint 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 Tellabs, Inc. and their ownership of Tellabs, Inc.
stock is set forth in the proxy statement for Tellabs, Inc.'s 2004
annual meeting of stockholders. 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 joint proxy statement/prospectus when it becomes
available. 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 statements.
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. Copyright 2004. All rights reserved. Tellabs, the Tellabs
logo 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. DATASOURCE:
Tellabs CONTACT: Investor: Tom Scottino, +1-630-798-3602, , or
Media: George Stenitzer, +1-630-798-3800, , both of Tellabs; or
Investor: Jeff Finn, +1-707-793-7720, , Media: Teresa Novak,
+1-707-793-4410, , both of AFC Web site: http://www.tellabs.com/
http://www.afc.com/
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