ADC Telecommunications Inc. said Monday, Oct. 22, it agreed to buy LGC Wireless Inc.,
a maker of in-building wireless networking technology, in a move to
expand into one of the fastest-growing areas of the wireless equipment
market.Under the deal, Minneapolis-based ADC will pay $169 million
in cash and assume $20.5 million in debt and obligations for employee
bonuses. The deal is expected to close by late January.
LGC, an 11-year-old company based in San Jose, Calif., has raised
roughly $91 million in venture capital, including an $11 million
mezzanine financing in its most recent round in 2005. Its backers
include Rembrandt Venture Partners of Menlo Park, Calif., Allegis Capital of Palo Alto, Calif., Canadian pension fund Omers of Toronto and Crystal Ventures of Cleveland.
ADC makes a range of technology for wireless, wireline, cable,
broadcast and enterprise network communications. The in-building
wireless technology that LGC specializes in has become one of the
strongest growth markets in the communications sector. In a statement,
ADC said that adding LGC will further diversify its revenue base and
more than double its wireless business to more than 9% of total
revenues. ADC also said that industry estimates show as many as 70% of
cell-phone calls and text messages are completed indoors, noting that
the in-building wireless market is expected to grow to $2.9 billion in
2010, from $1.6 billion in 2007.
LGC's revenues in the 12-month period ended Sept. 30 nearly doubled
to $83 million, compared with $43 million in the year-ago period.
