The story of a failed merger proves to be a page turner

Article Abstract:

Several factors contributed to the failed merger between Tellabs and telecommunications equipment manufacturer Ciena. The Sep 1998 announcement surprised observers, some of whom praised the $7.1 billion stock deal reached in May 1998. Finances presented one problem in Aug 1998, when Ciena warned that its 3rd qtr 1998 earnings would fall more than 50% short of estimates. The per-share value of Ciena and Tellabs declined the next day by 11% and 8% respectively. AT&T then said in Aug 1998 that it had halted testing of Ciena's prestigious technology, which boosts fiber optic cable's capacity to carry information. Ciena's Pres and CEO, Patrick H. Nettles, said he was discouraged from contacting AT&T counterpart C. Michael Armstrong to discuss the cancellation. Nettles also acknowledged occasional failure by Ciena to disclosed testing results on a timely basis. Tellabs on the same day received an anonynous E-mail message which accused Ciena of falsifying test results on certain equipment.

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Two makers of phone gear join forces

Article Abstract:

Tellabs has agreed to acquire fellow telecommunications equipment company Ciena for $7.3 billion in stock, according to insiders. Terms call for Ciena shareholders to receive one share of Tellabs stock, valued at $65.875 in Nasdaq trading, for each of their Ciena shares, valued at $57.5625. Ciena shareholders are expected to own 35% of Tellabs, and Ciena will hold four seats on the board. Tellabs, which manufactures equipment that allows circuit communication without soldering them together, will control the remaining eight seats. Ciena is a networking company that reported 1997 sales of $373.8 million. A renowned Ciena technology lets long-distance carriers boost network capacity by at least 16 times without putting new cables underground. The presence of larger firms such as Lucent Technologies, Northern Telecom and Siemens is pressuring small but influential firms like Tellabs and Ciena to increase their size.

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Tellabs is said to be near new deal for Ciena

Article Abstract:

Tellabs will restructure its bid to acquire long-distance telecommunications equipment maker Ciena for between $4.1 billion and $4.7 billion, according to an executive insider. Financial terms of the deal, which could be announced as soon as today, would call for Tellabs to exchange 0.7 or 0.8 shares for each Ciena share. The deal is based on Tellabs's Aug 27, 1998, closing stock price of $57.8125. By comparison, the value of the original Jun 1998 one-for-one stock swap stood at $7.1 billion, according to estimates. Ciena's mid-Aug 1998 announcement of a disappointing 3rd qtr 1998 resulted in two weeks of renegotiations with Tellabs. Ciena warned that its per-share profits would range between 13 and 15 cents, which was down sharply from a First Call analysts's survey projection of 32 cents.

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