ADVA Optical Networking to acquire MRV Communications for $69m
05 July 2017 | Jason McGee-Abe
ADVA Optical Networking has entered into a definitive agreement to acquire MRV Communications, a provider of innovative network solutions for data centre operators, service providers, and enterprises, for around $69 million.
If successful, the strategic purchase will complete in Q3 2017 and strengthen ADVA Optical Networking’s product portfolio of optical, Ethernet and software solutions and expand its customer base, especially in non-European regions. Under the terms of the agreement, ADVA Optical Networking will make a tender offer of $10.00 per share for all the outstanding common stock of California-based MRV. The offer equates to an aggregate purchase price of $69 million.
“MRV Communications, Inc. is a company that shares many of our values. It's a company that has built a strong reputation focused on customer success and satisfaction. Over 29 years, it has driven some key innovations and played an important role in shaping our industry,” said Brian Protiva, CEO of ADVA Optical Networking.
“That's why we signed a definitive agreement to acquire it today. We believe there's a strong synergy between our two companies. MRV Communications, Inc.'s technology and talent will strengthen our own product set and help us to deliver even more value to our customers. Our combined teams present the marketplace with an incredibly compelling skill set and technology base.”
ADVA Optical Networking's acquisition of MRV will, if completed, be the second significant acquisition it has made in as many years. The agreement has been approved and unanimously recommended by both the companies’ board of directors.
In 2016, the company successfully acquired Overture Networks to strengthen its Carrier Ethernet portfolio and create one of the industry's most successful NFV product suites - Ensemble. Earlier this year, Ensemble was selected by Verizon to drive its virtual uCPE solution. ADVA Optical Networking's continued success across a range of customer segments led to the posting of record Q1 revenues in April 2017.
In 2016, MRV recorded revenues of $80.3 million. For the Q1 2017, the company reported revenues of $21.2 million, cash and cash equivalents of $21.7 million and listed no debt.
"The networking industry is experiencing one of the most exciting and tumultuous phases in its history. The pace of innovation has never been faster or more demanding. To continue to exceed customer expectations and outperform network demands, we must use every possible advantage," said Uli Dopfer, CFO of ADVA Optical Networking, who was appointed on 1 January 2015.
"Our acquisition of MRV Communications, Inc. will help us to do this. It not only strengthens our cloud access portfolio, but it also opens the door to new customers. There can be no question that this acquisition will present many new business opportunities, especially for communication service providers who are seeking to explore the possibilities of virtualised network services. Together, ADVA Optical Networking and MRV Communications, Inc. present an exciting networking force."
Mark Bonney, CEO of MRV, added: “The network equipment markets that we serve continue to be highly competitive. In this environment, we concluded that the best course of action for MRV’s shareholders was to undertake a review of strategic alternatives. At the conclusion of this review, we have determined that the agreement we have reached to be acquired by ADVA Optical Networking provides the best alternative for MRV and its shareholders. We see a very natural fit between ADVA Optical Networking and MRV as both companies have been long-standing suppliers to the Carrier Ethernet and optical transport markets. With so much in common technically and culturally but with relatively little overlap among customers, the combined company will be in a stronger position to support the evolving needs of its target markets.”
Cowen and Company, LLC is acting as financial adviser to MRV. Norton Rose Fulbright LLP and Hogan Lovells are respectively serving as MRV's and ADVA Optical Networking's legal advisers.
The acquisition is subject to customary closing conditions, including the tender of at least a majority of MRV Communications, Inc. outstanding shares of common stock. It is expected to be completed in August or September of 2017.
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