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Summary of Transaction
ADC has acquired Century Man Communication for $55 million in cash, plus contingent cash payments of up to $15 million during the next 36 months, based on meeting agreed upon financial performance metrics. Century Man Communication had sales of approximately US $40 million in the 12 months ending September 30, 2007.
Prior to this acquisition, ADC had about 1 percent of its sales and 4 percent of its employees in China. After this acquisition, ADC will have about 4 percent of its sales and 13 percent of its employees in China.
The company expects to take a charge for various acquisition-related expenses, the amount of which has not been determined. Inclusive of potential intangible amortization and non-recurring and/or non-operating acquisition-related charges, the transaction is expected to be dilutive to GAAP earnings per share in the first year or two of operations following the close of the transaction. Excluding these charges, ADC expects the acquisition to be non-dilutive to diluted earnings per share from continuing operations in fiscal 2008 and 2009, and accretive to diluted earnings per share from continuing operations thereafter. As discussed below, actual results will be subject to many risks and uncertainties.
Meeting Broadband Connectivity Demand in China and Across the Globe
The combination of ADC and Century Man Communication’s connectivity portfolios is designed to provide global customers with enhanced product offerings from the central office, through the outside plant, and to the customer premises. Century Man Communication’s products portfolio includes communication distribution frames (i.e., Optical Distribution Frames (ODF), Main Distribution Frames (MDF), Building Distribution Frames (BDF), Power Distribution Frames (PDF) and other Hybrid Distribution Frames), related accessories (e.g., fiber connectors and cabinets), wireless network products and other network products.
Century Man Communication’s customers include many of the Chinese telecom service providers and operators, including China Mobile, China Telecom, China Netcom, China Unicom and China Railway are major Century Man Communication customers, as well as original equipment manufacturers, such as ZTE and UT STARCOM.
Century Man Communication has a strong domestic market position, established manufacturing base and customer relationships, and dedicated team of professionals who we believe will be instrumental in the growth of our Broadband Connectivity Infrastructure business within the Chinese market.
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