Marlin Equity to buy US telecom equipment maker Tellabs for $891 mn

US telecom equipment company Tellabs Inc, yesterday agreed to be acquired by private equity firm Marlin Equity Partners for $891 million.

California-based Marlin Equity has offered to pay $2.45 per share in cash, a 4.3 per cent premium over Tellabs' 18 October closing price of $2.35.

Tellabs' stock was at around $9 per share in early 2010 and had hit $75 during the dot-com boom.

Tellabs co-founder, Michael Birck, the company's second-biggest shareholder, has approved the deal.

Founded in 1975, Tellabs was the darling of Wall Street during the telecom boom of the late 1990s, but found itself on the losing end due to stiff competition from bigger players like Huawei Technology, Cisco Systems and Alcatel-Lucent.

The Illinois-based company has posted a loss for 11 straight quarters, and for this year's second quarter, the company reported a net loss of $7.8 million on revenues of $212.1 million.

This is a far cry from the $731 million net profit the company posted on sales of $3.39 billion in 2000.

The company had come under pressure from activist institutional shareholder Dialectic Capital Management to sell itself. Tellabs said that it marketed itself to more than 30 firms before finalising on Marlin Equity.

"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," said, Tellabs chairman, Vince Tobkin, in a statement.

Marlin Equity is already familiar with networking companies since it acquired the optical networking unit of Nokia Siemens Networks' in December 2012 (See: NSN to sell optical fibre unit to Marlin Equity Partners, cut 650 German jobs ) and of Sycamore Networks early this year. "We view Tellabs' business as an ideal opportunity to capitalize on the growth in the telecom network equipment sector," said, Nick Kaiser, co-founder of Marlin Equity.