CHICAGO -- ADC Telecommunications Inc., a maker of networking equipment for telephone manufacturers, offered to buy Andrew Corp., a wireless telecommunications equipment vendor, yesterday in a stock transaction valued at $1.6 billion.
The proposed stock swap values shares of Illinois-based Andrew at $10.21 each, a 4 percent premium over its closing stock price Tuesday of $9.78.
As originally disclosed, the premium would have been 30 percent, but a steep drop of nearly 20 percent in ADC shares yesterday reduced that amount.
Industry observers say the deal gives Minnesota-based ADC a wider array of wireless offerings and a stronger presence in Asia, but the cost of those additions might be excessive.
``I like the rationale for the deal. It makes sense," Morningstar analyst John Slack said. ``My concern is ADC basically has been on a hot streak for a year . . . Are they giving up their momentum by going after Andrew?"
The ADC-Andrew deal would create a networking infrastructure company with $3.3 billion in annual sales.