Tyco Electronics to Buy ADC for About $1.25 Billion

Tyco Electronics Ltd., the world’s biggest maker of electronic connectors, agreed to buy ADC Telecommunications Inc. for about $1.25 billion to add broadband equipment that helps companies connect to the Internet.

Tyco Electronics will pay $12.75 a share, or 44 percent more than Eden Prairie, Minnesota-based ADC’s closing stock price yesterday, according to a statement today. The purchase will bolster Tyco Electronics’ profit by 14 cents a share in the first year, the Schaffhausen, Switzerland-based company said.

The acquisition will bolster Tyco Electronics’ presence in the network solution business as ADC adds equipment that provides connections to the Internet and products that help companies expand wireless networks.

“It makes them one of the bigger, leading global providers of broadband connectivity,” said Amit Daryanani, an analyst with RBC Capital Markets in New York. “It basically doubles the size they have in the network solutions business.”

Tyco Electronics rose $1.05, or 4.2 percent, to $26.33 at 11:52 a.m. in New York Stock Exchange composite trading. Before today, the shares had advanced 3 percent this year. ADC advanced $3.68, or 42 percent, to $12.53 on the Nasdaq Stock Market and had gained 43 percent in 2010.

Technology Bubble

Tyco Electronics was spun off from Tyco International Ltd. in 2007. The acquisition would be Tyco Electronics’ largest since it became a standalone company.

The company today also reported preliminary fiscal third- quarter adjusted profit of 70 cents a share, according to the statement. Analysts predicted 63 cents, the average of 11 estimates compiled by Bloomberg. Sales for the quarter ended June 25 were about $3.1 billion, up 23 percent from a year ago. Tyco Electronics expects to report complete results on July 22.

Barclays Plc and law firm Davis Polk and Wardwell advised Tyco Electronics on the deal. Morgan Stanley advised ADC and Dorsey & Whitney served as the legal advisers.

ADC’s shares fell from a high of $329.44 in 2000 after telecommunications customers cut back orders, and the technology bubble burst at the beginning of the decade.

ADC Chief Executive Officer Robert Switz, 63, has said the company will report sales growth in the second half of this year as phone companies invest in a new generation of network technology and add capacity to wireless networks.

To contact the reporter on this story: Will Daley in New York at wdaley2@bloomberg.net

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