SCHAFFHAUSEN, Switzerland ( TheStreet) -- In an effort to boost its wireless connectivity offerings, networking component maker Tyco Electronics (TEL) is buying broadband specialist ADC Telecommunications (ADCT) for $1.25 billion.
Investors responded positively to the deal. ADC's shares surged $3.68, or 41.58%, to $12.53 shortly after market open, far outpacing the modest advance in tech stocks that saw the Nasdaq gain 0.92%. Tyco Electronics shares were up 47 cents, or 1.29%, to $37.03.
"Consumers and enterprises want access to high-speed video and data wherever they are, on whatever devices they are using," explained Tom Lynch, the Tyco Electronics CEO, in a statement. This extends from smartphones to HD and 3-D TVs to computers with advanced video-conferencing capabilities, he added.
The Swiss electronics firm, which was downgraded by Merrill/BofA on Monday, will buy ADC for $12.75 a share as part of the all-cash deal, which is expected to close in the fourth quarter of this year.The transaction is structured as a tender offer, to be followed as soon as possible by a merger, said Tyco Electronics. The deal is expected to be accretive by approximately 14 cents per share in the first full year after closing, excluding any acquisition-related costs. Tyco Electronics also announced preliminary third-quarter results on Tuesday, reporting revenue of $3.1 billion, a 23% increase on the same period last year. Excluding items, Tyco earned 70 cents a share. Analysts surveyed by Thomson Reuters had expected sales of $3.04 billion and earnings of 63 cents a share. -- Reported by James Rogers in New York Follow James Rogers on Twitter.
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