CommScope plans to buy rival communications equipment maker Andrew for about $2.6 billion to help both sides cut manufacturing costs, the companies said on Wednesday.
The deal comes nearly a year after Andrew rejected as inadequate a $1.7 billion offer from CommScope .
The move follows a wave of consolidation among large telecommunications operators, a trend that has prompted equipment companies to follow suit so they can trim expenses and offer a broader set of technology.
The latest $15-a-share offer represents a 16 percent premium over Andrew's closing share price on Tuesday. At least 90 percent of it will be paid in cash, the companies said.
Andrew shares jumped 11.5 percent or $1.49 to $14.47. CommScope shares were down 2.7 percent at $53.66.
"Last year it was insufficient," Andrew Chief Executive Ralph Faison told Reuters in a phone interview when asked about last year's offer.
"Since then we have had the opportunity to work closely together to define the strategic rationale. We feel confident in the strategic growth of the company, and the current offer represents full and fair value for Andrew shareholders."
The companies said the deal, expected to close by the end of 2007, would help them to cut manufacturing costs and diversify their customer base.
Analysts had said a combination of the two companies would help trim procurement costs for copper and plastic, since both make coaxial cables, used for cable TV as well as high-speed Internet services.
"A lot of the stuff we do requires a great deal of materials, including copper and plastics," CommScope Chief Executive Frank Drendel told Reuters in the same phone interview.
He also said that bringing together their distribution channels would help them become a strong global player.
Based on the two companies' business results for fiscal year 2006, a combined company would have sales of around $3.8 billion, they said.
CommScope and Andrew also expect to generate savings, excluding one-time items, of around $90 million to $100 million in the second year after the deal is completed. About $50 million to $60 million of savings are expected in the first full year.
Transaction costs are expected to total around $70 million to $80 million in the first two years, they said.
Andrew is set to become a wholly owned subsidiary of CommScope, with Frank Drendel remaining chairman and CEO of CommScope.
CommScope last year dropped its unsolicited bid after Andrew rejected it as "inadequate." Around the same time, Andrew had also terminated a merger agreement with ADC Telecommunications .
In a separate statement on Wednesday, CommScope raised its second quarter revenue outlook to a range of $500 million to $510 million, from $490 million to $510 million, helped by increased consumer demand for faster Internet networks.
It also expects an operating margin of 15 percent to 16 percent, excluding items, compared with its previous forecast of 14.5 percent to 15.5 percent.