ADVA Optical Networking has entered into a definitive agreement to acquire MRV Communications, a California-based provider of packet-optical networking equipment, in an all-stock deal worth $69 million (€60.7 million).
If successful, the acquisition will strengthen ADVA’s optical, Ethernet and software portfolio, and help the company broaden its customer base, especially outside Europe.
“MRV Communications, Inc. is a company that shares many of our values. It's a company that has built a strong reputation focused on customer success and satisfaction. Over 29 years, it has driven some key innovations and played an important role in shaping our industry. That's why we signed a definitive agreement to acquire it,” said Brian Protiva, CEO, ADVA Optical Networking.
Under the agreement, ADVA will make a tender offer of $10.00 per share for all of MRV’s outstanding common stock, which closed at $9.85 per share before the deal was announced.
The offer has already been approved and unanimously recommended by the boards of directors of both ADVA and MRV. German financial publication Finanzen.net reports that ADVA has already secured 35 per cent of shares, through commitments made by MRV’s largest shareholder.
But in the same article, analysts pointed out that since the transaction does not include a premium, ADVA may be forced to increase the offer.
Though MRV Communications posted a loss for 2016 on revenues of $80.3 million, the company has no debt listed and sales have been increasing as legacy product lines are replaced by packet and optical platforms.
ADVA, meanwhile, posted record annual revenues of €566.7 million for 2016, and record first quarter revenues of €141.8 million for the quarter ending 31 March 2017.
This will, if completed, be ADVA’s second significant acquisition in as many years. In 2016, the company acquired Overture Networks to strengthen its Carrier Ethernet portfolio and create one of the industry's most successful NFV product suites – Ensemble. Earlier this year, Ensemble was selected by Verizon as part of its virtual universal customer premises equipment (uCPE) product.
“The networking industry is experiencing one of the most exciting and tumultuous phases in its history,” said Uli Dopfer, CFO, ADVA Optical Networking. “The pace of innovation has never been faster or more demanding. To continue to exceed customer expectations and outperform network demands, we must use every possible advantage. Our acquisition of MRV Communications, Inc. will help us to do this. It not only strengthens our cloud access portfolio, but it also opens the door to new customers. There can be no question that this acquisition will present many new business opportunities, especially for communication service providers who are seeking to explore the possibilities of virtualised network services.”
Subject to customary closing conditions, ADVA’s acquisition of MRV Communications is expected to be completed in August or September of 2017.