ADVA Optical Networking SE and ADTRAN, Inc., have signed a business combination agreement and exchange offer for all ADVA shares

30.08.2021

Ad hoc announcement according to Article 17 of the Market Abuse Regulation (EU) No. 596/2014

Munich, Germany – ADVA Optical Networking SE (“ADVA”) and ADTRAN, Inc. (“ADTRAN”) today entered into a Business Combination Agreement (“BCA”) under which a leading global provider of end-to-end fiber optic network solutions for network operators, companies and authorities should be created. To implement the business combination, ADVA and ADTRAN are to be merged under a new holding company, which was founded by ADTRAN as a subsidiary and which will apply for listing on NASDAQ and the Frankfurt Stock Exchange (“HoldCo”). The BCA provides that ADVA and ADTRAN each become a direct subsidiary of HoldCo; ADTRAN due to a merger under US law and ADVA through a public exchange offer (“Offer”) to all ADVA shareholders. Immediately after the conclusion of the merger agreement, HoldCo announced its intention to submit a voluntary takeover offer in the form of an exchange offer in accordance with section 10 (1) sentence 1 (3) WpÜG.

According to the terms of the offer, each ADVA share will be exchanged for 0.8244 HoldCo shares, corresponding to a value of EUR 17.17 per share, based on the ADTRAN closing price of USD 24.57 and a premium of 33% on the ADVA closing price on August 27, 2021, the last trading day before the BCA was signed. On the basis of volume-weighted three-month average prices, the offer amounts to EUR 14.98 per ADVA share, based on the volume-weighted three-month average price of ADTRAN on August 27, 2021. This corresponds to a premium of 22% on the volume-weighted three -Monthly average price of ADVA in the same period, an equity value of EUR 789 million and an enterprise value of EUR 759 million, which corresponds to an implicit multiple of 1.3x LTM sales as of June 30, 2021. The ADTRAN shares will be exchanged for shares in the new holding company on a one-for-one basis. Should all ADVA shareholders accept the offer, the ADVA shareholders would have a stake of around 46% and the ADTRAN shareholders around 54% in HoldCo after the merger is complete.

The transaction is expected to close in the second or third quarter of 2022 and will be subject to certain conditions. This includes the granting of all necessary antitrust and foreign trade approvals, the achievement of a minimum acceptance threshold of 70% of the ADVA shares issued, the approval of the general meeting of ADTRAN, the failure to take certain actions on the part of ADVA as well as the failure to occur certain material adverse events and other customary closing conditions.

The members of the Management and Supervisory Boards of ADVA welcome the offer. Subject to an examination of the offer document, your due diligence and all other legal obligations, you intended to support the exchange offer.

With regard to the planned merger, HoldCo has concluded a binding agreement (irrevocable undertaking) with EGORA Holding GmbH and its wholly-owned subsidiary EGORA Investment GmbH, in which they have undertaken to accept the exchange offer for shares, which in total represent around 13.7% of the share capital of ADVA.

The combined company will operate under the name ADTRAN Holdings, Inc. and will have its global headquarters in Huntsville, Alabama. The European headquarters are to be located in Planegg / Martinsried near Munich. After the closing, the HoldCo Board of Directors will consist of nine people and be made up of three representatives from ADVA and six representatives from ADTRAN. Thomas Stanton, ADTRAN’s Chairman and CEO, will assume the same role at the combined company upon completion of the transaction. ADVA’s CEO, Brian Protiva, will take on the role of Executive Vice Chairman. The chairman Nikos Theodosopoulos and Johanna Hey are to become members of the board of directors of the new company from ADVA’s supervisory board. ADTRAN’s CFO, Michael Foliano, will keep his current role and ADVA’s CTO, Christoph Glingener, will assume the same role at the combined company.

Based on the published business results for the twelve months leading up to June 30, 2021, the combined company will have annual sales of approximately USD 1.2 billion. With the combination, ADVA and ADTRAN aim to achieve annual pre-tax synergies of approximately USD 52 million within two years of closing. To achieve these synergies, one-time expenses of approximately USD 37 million are expected, including the transaction costs of the parties.

Contacts
Investor contact:
Steven Williams
t: +49 89 890 66 59 18
ir@adva.com

Press contact:
Gareth Spence
Tel.: +44 1904 69 93 58
public-relations@adva.com