Adtran (ADTN) and Germany’s ADVA have reached an agreement to merge. The merger will result in a combined company focused on offering fiber networking solutions. In addition, it will offer 5G infrastructure to businesses and homes with scalable and secure fiber connectivity.
The resultant company will be named Adtran Holdings Inc., with global headquarters in Huntsville, Alabama. It will also maintain a European headquarter in Munich, Germany. The combined company will boast an expanded product offering with combined revenue of $1.2 billion. The merger should also result in over $50 million in “annual run-rate cost synergies.”
“We expect the transaction will create significant long-term value for both companies’ stakeholders by increasing our scale and improving our ability to serve as a trusted supplier for customers worldwide,” said Adtran CEO Thomas Stanton.
Each ADVA share will be exchanged for 0.8244 shares of common stock in the new company. The offer represents a 22% premium to ADVA’s three-month volume-weighted average price. (See Adtran stock charts on TipRanks)
Adtran shareholders will be able to exchange their shares on a one-for-one basis for ownership in the new company. Once the transaction closes, Adtran shareholders will own about 54% of the new holding company, with ADVA shareholders owning 46%. The merger is expected to be completed by Q2 or Q3 of 2022.
Recently, Goldman Sachs analyst Rod Hall reiterated a Hold rating on Adtran and raised his priced target to $22 from $20, implying 7.26% upside potential to current levels.
Consensus among analysts is a Moderate Buy based on 2 Buys and 1 Hold. The average analyst price target of $25.33 implies 23.50% upside potential to current levels.
ADTN scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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