sv4
As filed with the Securities and Exchange Commission on
June 28, 2006
Registration
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-4
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
ADC TELECOMMUNICATIONS,
INC.
(Exact name of registrant as
specified in its charter)
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Minnesota
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3661
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41-0743912
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(State or other jurisdiction
of
organization)
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(Primary standard industrial
classification code number)
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(IRS employer
identification no.)
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13625 Technology Drive
Eden Prairie, MN 55344
(952) 938-8080
(Address, including
zip code, and telephone number,
including area code, of
registrants principal executive offices)
Jeffrey D. Pflaum
Vice President, General
Counsel & Secretary
ADC Telecommunications,
Inc.
13625 Technology Drive
Eden Prairie, MN 55344
(952) 938-8080
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
Copies to:
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Robert A. Rosenbaum
Dorsey & Whitney LLP
50 South Sixth Street, Suite 1500
Minneapolis, Minnesota 55402
(612) 340-2600
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James T. Lidbury
Mayer, Brown, Rowe & Maw LLP
71 South Wacker Drive
Chicago, Illinois 60606
(312) 782-0600
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Approximate date of commencement of proposed sale to the
public: As soon as practicable after the
effective date of this Registration Statement and upon
completion of the merger described in the enclosed joint proxy
statement/prospectus.
If the securities being registered on this form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check the
following box. o
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
number of the earlier effective registration statement for the
same offering. o
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier, effective registration statement for the same
offering. o
CALCULATION OF REGISTRATION
FEE
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class of
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Amount
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Offering
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Aggregate
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Registration
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Securities to be
Registered
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to be Registered(1)
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Price per Share
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Offering Price
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Fee
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Common stock, par value
$0.20 per share
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106,901,664
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N/A
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$947,683,246.57(2)
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$101,402.11
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Rights to purchase shares of
Series A Junior Participating Preferred Stock, par value
$0.0001 per share(3)
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106,901,664
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N/A
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N/A
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N/A
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(1)
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This registration statement relates
to common stock, $0.20 par value per share, of ADC
Telecommunications, Inc. (ADC), issuable to holders
of common stock, $0.01 par value per share, of Andrew
Corporation (Andrew), in the proposed merger of
Hazeltine Merger Sub, Inc., a wholly owned subsidiary of ADC,
with and into Andrew. The amount of ADC common stock to be
registered has been determined by multiplying (A) the
exchange ratio (0.57 shares of ADC common stock for each
share of Andrew common stock) by (B) 187,546,778, the
maximum number of shares of Andrew common stock that may be
cancelled in the merger (the sum of
(i) 159,659,113 shares of Andrew common stock
outstanding as of June 15, 2006,
(ii) 9,356,097 shares of Andrew common stock issuable
upon the exercise or vesting of awards made pursuant to Andrew
stock-based plans as of June 15, 2006 (whether or not
currently exercisable), (iii) 1,000,000 shares of
Andrew common stock issuable upon the exercise of warrants
issued by Andrew as of June 15, 2006 and
(iv) 17,531,568 shares of Andrew common stock into
which convertible notes issued by Andrew are convertible as of
June 15, 2006).
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(2)
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Estimated solely for purposes of
calculation of the registration fee in accordance with
Rules 457(c) and (f) of the Securities Act of 1933, as
amended (the Securities Act), based upon the product
of: (A) 187,546,778, the maximum number of shares of Andrew
common stock that may be cancelled in the merger, multiplied by
(B) $8.87, the average of the high and low sale prices for
shares of Andrew common stock as reported on the Nasdaq National
Market on June 27, 2006.
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(3)
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The preferred stock purchase
rights, which are attached to the shares of ADC common stock
being registered hereunder, will be issued for no additional
consideration. Accordingly, no additional registration fee is
required.
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
The
information in this joint proxy statement/prospectus is not
complete and may be changed. ADC may not sell these securities
until the registration statement filed with the Securities and
Exchange Commission is effective. This joint proxy
statement/prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
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SUBJECT
TO COMPLETION, DATED JUNE 28, 2006.
SPECIAL MEETING OF SHAREHOLDERS
MERGER PROPOSED YOUR VOTE IS
VERY IMPORTANT
Each of the boards of directors of ADC Telecommunications, Inc.
and Andrew Corporation has approved a merger to effect a
strategic business combination of ADC and Andrew.
If the merger is consummated, ADC will be renamed ADC
Andrew, Inc. and holders of Andrew common stock will
receive 0.57 of a share of ADC Andrew common stock for each
share of Andrew common stock they own. This is a fixed exchange
ratio that will not be adjusted for changes in the stock price
of either company before the merger is consummated. ADC common
stock is listed on the Nasdaq Global Market under the symbol
ADCT. On June 27, 2006, the last trading day
before the date of this joint proxy statement/prospectus, the
closing price of ADC common stock was $16.12 per share. Andrew
common stock is listed on the Nasdaq Global Market under the
symbol ANDW.
At ADCs special meeting, shareowners of ADC will be asked
to approve the issuance of shares of ADC Andrew common stock to
the stockholders of Andrew in the merger. At Andrews
special meeting, stockholders of Andrew will be asked to adopt
the merger agreement.
The dates, times and places of the special meetings are as
follows:
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For ADC shareowners:
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For Andrew stockholders:
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, 2006
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, 2006
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a.m., local time
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a.m., local time
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[Location]
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[Location]
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This joint proxy statement/prospectus provides you with
information about ADC, Andrew and the proposed merger. You may
obtain other information about ADC and Andrew from documents
filed with the Securities and Exchange Commission. We encourage
you to read the entire joint proxy statement/prospectus
carefully.
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Robert E. Switz
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Ralph E. Faison
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President and Chief Executive
Officer
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President and Chief Executive
Officer
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ADC Telecommunications, Inc.
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Andrew Corporation
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FOR A DISCUSSION OF SIGNIFICANT MATTERS THAT SHOULD BE
CONSIDERED BEFORE VOTING AT THE SPECIAL MEETING, SEE RISK
FACTORS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES REGULATORS HAVE APPROVED OR DISAPPROVED THE
SHARES OF ADC ANDREW COMMON STOCK TO BE ISSUED IN THE
MERGER OR DETERMINED WHETHER THIS JOINT PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
This joint proxy statement/prospectus is
dated , 2006, and is first being mailed to
shareowners of ADC and the stockholders of Andrew on or
about , 2006.
THIS JOINT PROXY STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
ADC TELECOMMUNICATIONS, INC.
13625 Technology Drive
Eden Prairie, MN 55344
(952) 938-8080
NOTICE OF SPECIAL MEETING OF
SHAREOWNERS
TO BE HELD
ON , 2006
To ADC Shareowners:
Notice is hereby given that we will hold a special meeting of
shareowners of ADC Telecommunications, Inc., a Minnesota
corporation, which is referred to as ADC,
at a.m., local time, on , 2006
at for the following purposes:
1. To consider and vote upon Proposal No. 1 for
the issuance of shares of ADC Andrew common stock in the merger
contemplated by the Agreement and Plan of Merger, dated as of
May 30, 2006, by and among ADC, Hazeltine Merger Sub, Inc.,
a Delaware corporation and a wholly owned subsidiary of ADC, and
Andrew Corporation, a Delaware corporation. We refer to this
proposal in the joint proxy statement/prospectus as
Proposal No. 1.
2. To consider and vote upon Proposal No. 2 for
an adjournment of the ADC special meeting to solicit additional
proxies for approval of Proposal No. 1, if necessary.
We refer to this proposal in the joint proxy
statement/prospectus as Proposal No. 2.
3. To transact such other business as may properly come
before the special meeting or any adjournment or postponement of
the ADC special meeting.
In connection with, and as an integral part of, the merger, four
members of ADCs board of directors will resign effective
as of the effective time of the merger. By approving
Proposal No. 1, and assuming the merger closes, ADC
shareowners will be electing four members of the Andrew
Corporation board of directors to fill vacancies on the board of
directors of the combined company created by the resignations of
the departing ADC directors.
ADCs board of directors knows of no other business to be
conducted at the ADC special meeting. The board of directors of
ADC has fixed , 2006 as the record date for the
determination of shareowners entitled to notice of, and to vote
at, the ADC special meeting and any adjournment or postponement
thereof. Only holders of record of shares of ADC common stock at
the close of business on the record date are entitled to notice
of, and to vote at, the ADC special meeting. At the close of
business on the record date, ADC had outstanding and entitled to
vote shares of common stock.
Your vote is important. The affirmative vote of the holders
of a majority of the votes cast in person or by proxy at the ADC
special meeting is required for approval of each of
Proposal No. 1 and Proposal No. 2. Even if
you plan to attend the special meeting in person, we request
that you vote in any one of the following ways to ensure that
your shares will be represented at the ADC special meeting if
you are unable to attend:
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Sign and return the enclosed proxy card in the enclosed
postage paid envelope;
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Vote by telephone by calling the toll-free number shown on
the proxy card; or
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Vote by using the Internet as instructed on the enclosed
proxy card.
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If you sign, date and mail your proxy card without indicating
how you wish to vote, your proxy will be counted as a vote in
favor of the issuance of shares of ADC Andrew common stock in
the merger and an adjournment of the ADC special meeting, if
necessary. If you do not return the proxy card, vote by
telephone or by using the Internet or vote in person at the ADC
special meeting, the effect will be that your shares will not be
counted for purposes of determining whether a quorum is present
at the ADC special meeting.
You may revoke your proxy in the manner described in the
accompanying joint proxy statement/prospectus at any time before
it has been voted at the ADC special meeting. If you attend the
ADC special meeting, you may vote in person even if you returned
a proxy. Please note, however, that if your shares are held of
record by a broker, bank or other nominee and you wish to vote
in person at the ADC special meeting, you must obtain from the
record holder a proxy issued in your name.
By Order of the Board of Directors,
Jeffrey D. Pflaum
Vice President, General Counsel and Secretary
Eden Prairie, Minnesota
, 2006
ADCS BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES
THAT THE ISSUANCE OF SHARES OF ADC ANDREW COMMON STOCK IN
THE MERGER IS ADVISABLE TO, AND IN THE BEST INTERESTS OF, ADC
AND ITS SHAREOWNERS, AND RECOMMENDS THAT ADC SHAREOWNERS VOTE
FOR PROPOSAL NO. 1 AND FOR
PROPOSAL NO. 2.
ANDREW CORPORATION
3 Westbrook Corporate Center
Westchester, IL 60154
(708) 236-6600
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
TO BE HELD ON , 2006
To the stockholders of Andrew Corporation:
You are cordially invited to attend a special meeting of
stockholders of Andrew Corporation, a Delaware corporation, to
be held on , 2006 at , local
time, at , for the following purposes:
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To consider and vote upon Proposal No. 1 to adopt the
Agreement and Plan of Merger, dated as of May 30, 2006, by
and among ADC Telecommunications, Inc., a Minnesota Corporation,
Hazeltine Merger Sub, Inc., a Delaware corporation and
wholly-owned subsidiary of ADC, and Andrew, as the same may be
amended from time to time. We refer to this proposal in the
joint proxy statement/prospectus as Proposal No. 1.
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To consider and vote upon Proposal No. 2 for an
adjournment of the Andrew special meeting to solicit additional
proxies for approval of Proposal No. 1, if necessary.
We refer to this proposal in the joint proxy
statement/prospectus as Proposal No. 2.
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To transact such other business as may properly come before the
special meeting or any adjournment or postponement of the
special meeting.
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You are entitled to vote only if you were a holder of Andrew
common stock at the close of business on , 2006.
YOUR PROXY IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND
THE SPECIAL MEETING, PLEASE VOTE IN ANY ONE OF THE FOLLOWING
WAYS:
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USE THE TOLL-FREE TELEPHONE NUMBER SHOWN ON THE PROXY CARD;
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USE THE INTERNET WEBSITE SHOWN ON THE PROXY CARD; OR
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MARK, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN
THE POSTAGE-PAID ENVELOPE. IT REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
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By Order of the Board of Directors,
Justin C. Choi,
Senior Vice President, General Counsel and Secretary
Westchester, Illinois
, 2006
ANDREWS BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES
THAT ADOPTION OF THE MERGER AGREEMENT IS ADVISABLE TO, AND IN
THE BEST INTERESTS OF, ANDREW AND ITS STOCKHOLDERS, AND
RECOMMENDS THAT ANDREW STOCKHOLDERS VOTE FOR
PROPOSAL NO. 1 AND FOR
PROPOSAL NO. 2.
ADDITIONAL
INFORMATION
This joint proxy statement/prospectus incorporates by
reference important business and financial information
about ADC and Andrew from documents that are not included in or
delivered with this joint proxy statement/prospectus. For a more
detailed description of the information incorporated by
reference in this joint proxy statement/prospectus and how you
may obtain it, see Where You Can Find More
Information.
You may also obtain any of the documents incorporated by
reference from the appropriate company, the Securities and
Exchange Commission, which we refer to as the SEC, or the
SECs Internet web site at
http://www.sec.gov.
Documents incorporated by reference in this joint proxy
statement/prospectus are available from the appropriate company
without charge, excluding all exhibits unless specifically
incorporated by reference in such documents. Shareholders may
obtain documents incorporated by reference in this joint proxy
statement/prospectus by requesting them in writing or by
telephone from the appropriate company at the following
addresses:
ADC Telecommunications, Inc.
Attn: Investor Relations
P.O. Box 1101
Minneapolis, Minnesota
55440-1011
Telephone:
(952) 917-0991
E-mail:
investor@adc.com
Internet:
www.adc.com/investorrelations/financialinformation/secfilings/
Andrew
Corporation
Attn:
Investor Relations
3 Westbrook Corporate Center
Suite 900
Westchester, Illinois 60154
Telephone:
(800) 232-6767
E-mail:
InvestorSection@andrew.com
If you would like to request documents, please do so
by , 2006, which is five business days before
the respective special meetings, to receive them before the
special meetings. If you request any information that is
incorporated by reference into this joint proxy
statement/prospectus, the appropriate company will respond to
your request within one business day of receipt of your request,
and send the requested documents to you by first class mail, or
other equally prompt means.
TABLE OF
CONTENTS
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QUESTIONS
AND ANSWERS ABOUT THE MERGER
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A: |
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ADC and Andrew have entered into an Agreement and Plan of
Merger, dated May 30, 2006, which we refer to in this joint
proxy statement/prospectus as the merger agreement. The merger
agreement contains the terms and conditions of the proposed
strategic business combination of ADC and Andrew. Under the
merger agreement, Andrew and Hazeltine Merger Sub, Inc., a
wholly owned subsidiary of ADC, will merge, with Andrew
surviving as a wholly owned subsidiary of ADC. Upon the closing
of the merger ADC will change its name to ADC Andrew Inc. In
this joint proxy statement/prospectus, we refer to the combined
company formed by the merger as ADC Andrew and the ADC common
stock to be issued in the merger as ADC Andrew common stock.
This transaction is referred to as the merger. For a more
complete description of the merger, please see the section
entitled Andrew Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance. |
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WHAT WILL ANDREW STOCKHOLDERS RECEIVE IN THE MERGER? |
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As a result of the merger, Andrew stockholders will receive
0.57 shares of ADC Andrew common stock for each share of
Andrew common stock they own. For example, if you own
100 shares of Andrew common stock, you will receive
57 shares of ADC Andrew common stock in exchange for your
Andrew shares. You will also receive a cash payment in lieu of
any fractional share of ADC Andrew common stock that you would
otherwise receive. |
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WHAT WILL THE NAME AND TRADING SYMBOL OF THE COMBINED COMPANY
BE? |
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Immediately following the effective time of the merger, ADC will
change its name to ADC Andrew Inc. Following the merger, ADC
Andrews common stock will continue to be listed on the
Nasdaq Global Market under the symbol ADCT and there
will be no further market for Andrew common stock. |
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WHAT PERCENTAGE OF ADC ANDREW SHARES WILL BE HELD BY
CURRENT ANDREW STOCKHOLDERS? |
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The shares of ADC Andrew common stock issued to current Andrew
stockholders in connection with the merger, which we refer to as
the ADC Andrew share issuance, are expected to represent
approximately 44% of the outstanding shares of ADC Andrew common
stock immediately following the consummation of the merger,
based on the number of shares of ADC common stock and Andrew
common stock outstanding on June 28, 2006 (including any
Andrew restricted stock units that will vest as a result of the
merger), assuming that no Andrew or ADC stock options or
warrants are exercised, or convertible notes converted, after
June 28, 2006 and prior to the effective time of the merger. |
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WHO WILL SERVE ON THE BOARD OF DIRECTORS OF THE COMBINED
COMPANY? |
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In connection with the merger, four members of ADCs board
of directors (James C. Castle, Ph.D., John E. Rehfeld,
Jean-Pierre Rosso and John D. Wunsch) will resign effective as
of the effective time of the merger. Four members of
Andrews board of directors (Gerald A. Poch, Anne F.
Pollack, Glen O. Toney and Andrea L. Zopp) will be elected and
join eight members of ADCs board of directors
(John A. Blanchard III, John J. Boyle III,
Mickey P. Foret, J. Kevin Gilligan, Lois M. Martin, William R.
Spivey, Ph.D., Robert E. Switz and Larry W. Wangberg) to
form the ADC Andrew board of directors immediately after the
closing of the merger. |
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By approving ADC Proposal No. 1, and assuming the
merger closes, ADC shareowners, as an integral part of the
merger, will be electing the four members of the Andrew board of
directors listed above to fill the vacancies on the ADC Andrew
board created by the resignations of the departing ADC
directors. For further information on the ADC Andrew board of
directors, please see the section entitled Andrew
Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance ADC Andrew Board of
Directors. |
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WHY AM I RECEIVING THIS JOINT PROXY STATEMENT/PROSPECTUS? |
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You are receiving this joint proxy statement/prospectus because
you have been identified as a shareholder of either ADC or
Andrew, and thus you are entitled to vote at such companys
special meeting. This document serves as both a joint proxy
statement of ADC and Andrew, used to solicit proxies for their
respective special meetings, and as a prospectus of ADC, used to
offer shares of ADC Andrew common stock in exchange for shares
of Andrew common stock pursuant to the terms of the merger
agreement. This document contains important information about
the merger and the special meetings of ADC and Andrew and you
should read it carefully. |
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Q: |
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WHEN AND WHERE WILL THE SPECIAL MEETINGS TAKE PLACE? |
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A: |
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The special meeting of ADC is scheduled to take place
at , local time, on , 2006,
at . |
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The special meeting of Andrew is scheduled to take place
at , local time, on , 2006,
at . |
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Q: |
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WHO IS ENTITLED TO VOTE AT THE SPECIAL MEETINGS? |
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A: |
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Holders of record of ADC common stock as of the close of
business on , 2006, which we refer to as the
ADC record date, are entitled to vote at the ADC special
meeting. Each ADC shareowner has one vote for each share of ADC
common stock that the shareowner owns on the ADC record date. |
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Holders of record of Andrew common stock as of the close of
business on , 2006, which we refer to as the
Andrew record date, are entitled to vote at the Andrew special
meeting. Each Andrew stockholder has one vote for each share of
Andrew common stock that the stockholder owns on the Andrew
record date. |
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Q: |
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WHAT VOTE IS REQUIRED TO APPROVE THE ADC ANDREW SHARE
ISSUANCE AND THE MERGER? |
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ADC shareowners must approve the issuance of shares of ADC
Andrew common stock in the merger, which approval requires the
affirmative vote of the holders of a majority of the votes cast
in person or by proxy at the ADC special meeting (provided a
quorum is present). |
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Andrew stockholders must adopt the merger agreement, which
adoption requires the affirmative vote of the holders of a
majority of the voting power of the shares of Andrew common
stock issued and outstanding on the Andrew record date. Adoption
of the merger agreement by Andrew stockholders will constitute
approval of all of the transactions contemplated in the merger
agreement. |
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Q: |
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WHAT ELSE IS REQUIRED TO CONSUMMATE THE MERGER? |
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A: |
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In addition to the receipt of the shareholder approvals
described above, certain regulatory approvals, including U.S.
and certain foreign antitrust clearances, along with other
closing conditions set forth in the merger agreement, must be
satisfied or waived. For a more complete description of the
conditions to the consummation of the merger, we urge you to
read the section entitled The Merger
Agreement Conditions to Completion of the
Merger in this joint proxy statement/prospectus and the
merger agreement attached to this joint proxy
statement/prospectus as Annex A. |
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Q: |
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CAN THE VALUE OF THE TRANSACTION CHANGE BETWEEN NOW AND THE
TIME THE MERGER IS COMPLETED? |
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Yes. The value of the transaction can change because the value
of ADC common stock may, and likely will, change between now and
the effective time of the merger. The 0.57 exchange ratio is a
fixed exchange ratio, meaning that you will receive
0.57 shares of ADC Andrew common stock for each share of
Andrew common stock you own regardless of the trading price of
ADC common stock on the effective date of the merger. The market
value of the ADC Andrew common stock you may receive in the
merger will increase or decrease as the trading price of
ADCs common stock increases or decreases. As a result, the
value of the stock you may receive in the merger may be
different at the time the merger is completed than it was at the
time the merger agreement was signed and at the time of
Andrews special meeting. There can be no assurance as to
the market price of ADC common stock at any time prior to |
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the completion of the merger or at any time thereafter. ADC and
Andrew shareholders are urged to obtain current market
quotations for ADC common stock and Andrew common stock. |
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HOW WILL ANDREW STOCK OPTIONS BE AFFECTED BY THE MERGER? |
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At the effective time of the merger, each Andrew stock option
that is outstanding and unexercised immediately prior to the
effective time will be converted into an option to purchase
shares of ADC Andrew common stock and ADC Andrew will assume
that stock option in accordance with the terms of the applicable
Andrew stock option plan and stock option agreement relating to
that Andrew stock option. The number of shares underlying the
Andrew stock options and their exercise prices will be adjusted
to reflect the exchange ratio used in the merger. At the
effective time of the merger, all unvested Andrew stock options
will vest and become immediately exercisable in accordance with
the terms of the applicable Andrew stock plans. For more
information, please see the section entitled The Merger
Agreement Treatment of Stock Options and
Restricted Stock Units. |
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Q: |
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HOW WILL ANDREW RESTRICTED STOCK UNITS BE AFFECTED BY THE
MERGER? |
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Each restricted stock unit granted by Andrew will be converted
into the right to receive shares of ADC Andrew common stock. The
number of shares relating to each restricted stock unit will be
adjusted to reflect the exchange ratio used in the merger. At
the effective time of the merger, all restrictions on the Andrew
restricted stock units will lapse in accordance with the terms
of the Andrew stock plans. For more information, please see the
section entitled The Merger
Agreement Treatment of Stock Options and
Restricted Stock Units. |
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WHAT ARE THE MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER TO ME? |
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The merger has been structured to qualify as a
reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as
amended, which we refer to as the Code, and it is a closing
condition to the merger that ADC and Andrew receive opinions of
their respective counsel regarding such qualification. As a
result of the mergers qualification as a reorganization,
Andrew stockholders will not recognize gain or loss for United
States federal income tax purposes upon the exchange of shares
of Andrew common stock for shares of ADC Andrew common stock,
except with respect to cash received in lieu of fractional
shares of ADC Andrew common stock. |
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Tax matters are very complicated, and the tax consequences of
the merger to a particular Andrew stockholder will depend in
part on such stockholders circumstances. Accordingly, we
urge you to consult your own tax advisor for a full
understanding of the tax consequences of the merger to you,
including the applicability and effect of federal, state, local
and foreign income and other tax laws. |
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For more information, see the section entitled Material
United States Federal Income Tax Consequences. |
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A: |
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If either ADC or Andrew fails to receive a sufficient number of
votes to approve its respective Proposal No. 1, ADC or
Andrew, as appropriate, may propose to adjourn its special
meeting, if a quorum is present, for a period of not more than
30 days for the purpose of soliciting additional proxies to
approve Proposal No. 1. Neither ADC nor Andrew intends
to propose adjournment at the special meeting if there are
sufficient votes to approve Proposal No. 1. Each
companys proposal to adjourn its special meeting, if
necessary, to solicit additional proxies is referred to as
Proposal No. 2. |
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HOW DOES ADCS BOARD OF DIRECTORS RECOMMEND THAT I
VOTE? |
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A: |
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After careful consideration, ADCs board of directors
recommends that ADC shareowners vote FOR
Proposal No. 1 to approve the issuance of shares of
ADC Andrew common stock in the merger and FOR
Proposal No. 2 to adjourn the ADC special meeting to
solicit additional proxies for approval of
Proposal No. 1, if necessary. For further information
about the ADC board recommendation, see the sections entitled
The ADC Special Meeting ADC Board
Recommendation, Andrew Proposal No. 1 |
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and ADC Proposal No. 1 The Merger and
The ADC Andrew Share Issuance Reasons for the
Merger, and ADC
Proposal No. 2 Possible Adjournment
of the Special Meeting. |
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Q: |
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HOW DOES ANDREWS BOARD OF DIRECTORS RECOMMEND THAT I
VOTE? |
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A: |
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After careful consideration, Andrews board of directors
recommends that the Andrew stockholders vote
FOR Proposal No. 1 to adopt the
merger agreement and FOR
Proposal No. 2 to adjourn the Andrew special meeting
to solicit additional proxies for approval of
Proposal No. 1, if necessary. For further information
about the Andrew board recommendation, see the sections entitled
The Andrew Special Meeting Andrew Board
Recommendation, Andrew Proposal No. 1 and
ADC Proposal No. 1 The Merger and The
ADC Andrew Share Issuance Reasons for the
Merger and Andrew
Proposal No. 2 Possible Adjournment
of the Special Meeting. |
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Q: |
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WHAT RISKS SHOULD I CONSIDER IN DECIDING WHETHER TO VOTE IN
FAVOR OF THE SHARE ISSUANCE OR THE ADOPTION OF THE MERGER
AGREEMENT? |
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A: |
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You should carefully review the section of this joint proxy
statement/prospectus entitled Risk Factors, which
presents risks and uncertainties related to the merger, ADC,
Andrew and the combined company. |
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WHEN DO YOU EXPECT THE MERGER TO BE CONSUMMATED? |
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A: |
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We anticipate that the consummation of the merger will occur
during the fall of 2006, but we cannot predict the exact timing.
For more information, please see the section entitled The
Merger Agreement Conditions to Completion of
the Merger. |
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WHAT DO I NEED TO DO NOW? |
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A: |
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We urge you to read this joint proxy statement/prospectus
carefully, including its annexes, and to consider how the merger
affects you. After such consideration, please provide your proxy
instructions as soon as possible so that your shares may be
represented at the respective special meetings. You may provide
your proxy instructions in three different ways: |
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Mail your signed proxy card in the enclosed return
envelope;
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Call the toll-free number included on your proxy
card; or |
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Vote via the Internet by following the instructions
on your proxy card. |
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Please provide your proxy instructions only once and as soon as
possible so that your shares can be voted at the ADC special
meeting or Andrew special meeting, as applicable. If your shares
of ADC common stock or Andrew common stock are held in a
brokerage account or by another nominee, you are considered the
beneficial owner of shares held in street name and
the proxy materials are being forwarded to you together with a
voting instruction card. Your broker or other nominee will vote
your shares only if you provide instructions on how to vote. You
should follow the directions provided by your broker or other
nominee regarding how to instruct your broker or other nominee
to vote your shares. |
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Q: |
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WHAT HAPPENS IF I DO NOT VOTE, DO NOT FULLY COMPLETE OR
RETURN A PROXY CARD OR OTHERWISE PROVIDE PROXY INSTRUCTIONS? |
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A: |
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ADC Proposal 1 and
Proposal 2 If you are an ADC
shareowner, the failure to return your proxy card or otherwise
provide proxy instructions could be a factor in establishing a
quorum for the ADC special meeting, which is required to
transact business at the meeting. If, however, a quorum is
otherwise present at the ADC special meeting, the failure to
return your proxy card or otherwise provide proxy instructions
will have no effect on the approval of the issuance of ADC
Andrew shares to Andrew stockholders in the merger or the
adjournment of the ADC special meeting, if necessary, to solicit
additional proxies for the approval of the issuance of ADC
Andrew shares to Andrew stockholders in the merger. |
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If you are an ADC shareowner and submit a signed proxy without
specifying the manner in which you would like your shares to be
voted, your shares will be voted FOR the
approval of the ADC Andrew share issuance and, if necessary,
FOR the adjournment of the ADC special
meeting to solicit additional proxies for the approval of the
issuance of ADC Andrew shares to Andrew stockholders in the
merger. |
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Andrew Proposal 1 If you are an
Andrew stockholder, the failure to return your proxy card or
otherwise provide proxy instructions will have the same effect
as voting AGAINST the adoption of the merger
agreement and could be a factor in establishing a quorum for the
Andrew special meeting, which is required to transact business
at the meeting. |
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Andrew Proposal 2 If you are an
Andrew stockholder, the failure to return your proxy card or
otherwise provide proxy instructions could be a factor in
establishing a quorum for the Andrew special meeting, which is
required to transact business at the meeting. If, however, a
quorum is otherwise present at the Andrew special meeting, the
failure to return your proxy card or otherwise provide proxy
instructions will have no effect on the approval of the
adjournment of the Andrew special meeting, if necessary, to
solicit additional proxies for adoption of the merger agreement. |
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If you are an Andrew stockholder and submit a signed proxy
without specifying the manner in which you would like your
shares to be voted, your shares will be voted FOR
the adoption of the merger agreement and, if necessary,
FOR the adjournment of the Andrew special
meeting to solicit additional proxies for adoption of the merger
agreement. |
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If your shares of ADC common stock or Andrew common stock are
registered directly in your name with ADCs or
Andrews transfer agent, respectively, you are considered,
with respect to those shares, the shareholder of record, and the
proxy materials and proxy card are being sent directly to you on
behalf of ADC or Andrew, respectively. If you are an ADC
shareowner of record, you may attend the ADC special meeting to
be held on , 2006, and vote your shares in
person, rather than signing and returning your proxy card or
otherwise providing proxy instructions. If you are an Andrew
stockholder of record, you may attend the Andrew special meeting
to be held on , 2006, and vote your shares in
person, rather than signing and returning your proxy card or
otherwise providing proxy instructions. |
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If your shares of ADC common stock or Andrew common stock are
held in a brokerage account or by another nominee, you are
considered the beneficial owner of shares held in street
name and the proxy materials are being forwarded to you
together with a voting instruction card. As the beneficial
owner, you are also invited to attend the ADC special meeting or
the Andrew special meeting, respectively. Because a beneficial
owner is not the shareowner of record, you may not vote these
shares in person at the applicable special meeting unless you
obtain a legal proxy from the broker, trustee or
nominee that holds your shares, giving you the right to vote the
shares at the meeting. |
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MAY I CHANGE MY VOTE AFTER I HAVE PROVIDED PROXY
INSTRUCTIONS? |
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Yes. You may change your vote at any time before your proxy is
voted at the ADC or Andrew special meeting, as applicable. You
can do this in one of three ways: |
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Send a written notice stating that you would like to
revoke your proxy; |
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Submit new proxy instructions either on a new proxy
card, by telephone or via the Internet; or |
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Attend the meeting and vote in person (if you are
entitled to do so, as described in the preceding question and
answer). |
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Your attendance alone will not revoke your proxy. If you have
instructed a broker to vote your shares, you must follow
directions received from your broker to change those
instructions. |
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SHOULD I SEND IN MY STOCK CERTIFICATES NOW? |
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No. If you are an Andrew stockholder, after the merger is
consummated, you will receive written instructions from
ComputerShare Investor Services LLC, acting as ADCs
exchange agent, which we refer to as ComputerShare, explaining
how to exchange your stock certificates representing shares of
Andrew common stock for shares of ADC Andrew common stock, which
will be issued in uncertificated book entry form. You will also
receive a cash payment in lieu of any fractional share of ADC
Andrew common |
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stock. We refer to the shares of ADC Andrew common stock
issuable in the merger, along with any cash payment in lieu of
any fractional share, as the merger consideration. ADC
shareowners will not exchange their stock certificates.
Please do not send in your stock certificates with your
proxy. |
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HOW WILL ANDREW STOCKHOLDERS RECEIVE THE MERGER
CONSIDERATION? |
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Following the merger, Andrew stockholders will receive a letter
of transmittal and instructions on how to obtain the merger
consideration in exchange for your Andrew common stock. You must
return the completed letter of transmittal and your Andrew stock
certificates as described in the instructions, and you will
receive the merger consideration as soon as practicable after
ComputerShare receives your completed letter of transmittal and
Andrew stock certificates. If you hold shares through a
brokerage account, your broker will handle the surrender of
stock certificates to ComputerShare. |
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AM I ENTITLED TO DISSENTERS OR APPRAISAL RIGHTS? |
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No. Under the Minnesota Business Corporations Act, ADC
shareowners are not entitled to dissenters rights in
connection with the merger or the issuance of the ADC Andrew
common stock in the merger. Under the Delaware General
Corporation Law, holders of Andrew common stock are not entitled
to appraisal rights in connection with the merger because both
ADC common stock and Andrew common stock are listed on the
Nasdaq Global Market. |
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WHO IS PAYING FOR THIS PROXY SOLICITATION? |
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ADC and Andrew are conducting this proxy solicitation and will
bear the cost of soliciting proxies, including the preparation,
assembly, printing and mailing of this joint proxy
statement/prospectus, the proxy card and any additional
information furnished to shareholders. ADC has engaged the
services of Innisfree M&A Incorporated to distribute proxy
solicitation materials to brokers, banks and other nominees and
to assist in the solicitation of proxies from ADC shareowners.
Andrew has retained MacKenzie Partners, Inc. to aid in
Andrews proxy solicitation process. ADC estimates that its
proxy solicitor fees will be approximately $100,000 and Andrew
estimates that its proxy solicitor fees will be approximately
$75,000, plus reimbursement of
out-of-pocket
expenses. ADC and Andrew may also reimburse brokerage houses and
other custodians, nominees and fiduciaries for their costs of
forwarding proxy and solicitation materials to beneficial owners. |
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DO I NEED TO ATTEND MY RESPECTIVE SPECIAL MEETING IN
PERSON? |
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No. It is not necessary for you to attend your respective
special meeting to vote your shares if either ADC or Andrew
previously has received your proxy, although you are welcome to
attend. |
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WHO CAN HELP ANSWER MY QUESTIONS? |
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ADC Shareowners: If you have questions about
the merger, including the procedures for voting your shares, or
would like additional copies, without charge, of this joint
proxy statement/prospectus, you should contact: |
ADC Telecommunications, Inc.
Attn: Investor Relations
P.O. Box 1101
Minneapolis, Minnesota
55440-1011
Telephone:
(952) 917-0991
E-mail:
investor@adc.com
Internet:
www.adc.com/investorrelations/financialinformation/secfilings/
Or
Innisfree M&A Incorporated
501 Madison Avenue
20th Floor
New York, New York 10022
Telephone:
(888) 750-5834
6
Banks and Brokers Call Collect:
(212) 750-5833
E-mail: info@innisfreema.com
Andrew Stockholders: If you have questions
about the merger, including the procedures for voting your
shares, or would like additional copies, without charge, of this
joint proxy statement/prospectus, you should contact:
Andrew Corporation
Attn: Investor Relations
3 Westbrook Corporate Center
Westchester, Illinois 60154
Telephone:
(800) 232-6767
E-mail:
InvestorSection@andrew.com
Or
MacKenzie Partners, Inc.
105 Madison Avenue
14th Floor
New York, New York 10016
Call Toll-Free
(800) 322-2885
or
Call Collect
(212) 929-5500
E-mail:
proxy@mackenziepartners.com
7
SUMMARY
OF THE JOINT PROXY STATEMENT/PROSPECTUS
This summary highlights selected information from this
document and may not contain all information that is important
to you. To understand the merger more fully, you should read
carefully this entire document, including its annexes, and the
documents incorporated by reference into this document. For
further information, including a list of documents incorporated
by reference, see the section entitled Where You Can Find
More Information. The merger agreement is attached as
Annex A to this joint proxy statement/prospectus. We
encourage you to read the merger agreement as it is the legal
document that governs the merger.
Comparative
Per Share Market Price Information
ADC common stock and Andrew common stock are listed on the
Nasdaq Global Market under the symbols ADCT and
ANDW, respectively. On May 30, 2006, the last
full trading day prior to the public announcement of the
proposed merger, ADC common stock closed at $22.38 and Andrew
common stock closed at $9.78. On June 27, 2006, ADC common
stock closed at $16.12 and Andrew common stock closed at $8.75.
For further information, see the section entitled Market
Price and Dividend Information for additional historical
prices of ADC and Andrew common stock.
The
Companies
ADC Telecommunications, Inc.
13625 Technology Drive
Eden Prairie, Minnesota 55344
Telephone:
(952) 917-0991
ADC is a leading global provider of communications network
infrastructure solutions and services. ADCs products and
services provide connections for communications networks over
copper, fiber, coaxial and wireless media and enable the use of
high-speed Internet, data, video and voice services by
residences, businesses and mobile communications subscribers.
Hazeltine Merger Sub, Inc. is a wholly owned subsidiary of ADC
that was incorporated in Delaware on May 25, 2006.
Hazeltine Merger Sub does not engage in any operations and
exists solely to facilitate the merger. For additional
information about ADC, please see the section entitled
Business of ADC.
Andrew Corporation
3 Westbrook Corporate Center
Suite 900
Westchester, Illinois 60154
Telephone:
(800) 232-6767
Andrew Corporation designs, manufactures and delivers innovative
and essential equipment and solutions for the global
communications infrastructure market. Andrew serves operators
and original equipment manufacturers from facilities in 35
countries. Andrew, headquartered in Westchester, IL, is an
S&P 500 company founded in 1937. For additional
information about Andrew, please see the section entitled
Business of Andrew.
The ADC
Special Meeting
Date, Time and Place. The special meeting of
ADC shareowners will be held on , 2006,
at commencing at local time.
What you are being asked to vote on. At the
ADC special meeting, ADC shareowners will vote on
Proposal No. 1 to approve the issuance of ADC Andrew
common stock in the merger and Proposal No. 2 to
adjourn the special meeting to solicit additional proxies for
approval of Proposal No. 1, if necessary.
Who may vote. Only holders of record of ADC
common stock at the close of business on the ADC record
date, , 2006, are entitled to notice of, and to
vote at, the ADC special meeting. There
were shares
8
of ADC common stock issued and outstanding at the close of
business on the ADC record date. Each share of ADC common stock
entitles its holder to one vote on each matter submitted for
shareowner approval.
What vote is needed. Approval of each of
Proposal No. 1 and Proposal No. 2 requires the
affirmative vote of the holders of a majority of the votes cast
in person or by proxy at the ADC special meeting, if a quorum is
present.
Share Ownership of Management. As
of June 21, 2006, the directors and executive officers
of ADC and their affiliates held approximately 0.3% of the
shares entitled to be voted at the ADC special meeting.
For further information regarding the ADC special meeting, see
the section entitled The ADC Special Meeting.
The
Andrew Special Meeting
Date, Time and Place. The Andrew special
meeting will take place at ,
on , 2006 at , local time.
What you are being asked to vote on. At the
Andrew special meeting, Andrew stockholders will vote on
Proposal No. 1 to adopt the merger agreement and
Proposal No. 2 to adjourn the special meeting to
solicit additional proxies for approval of
Proposal No. 1, if necessary. Adoption of the merger
agreement by Andrew stockholders will constitute approval of all
of the transactions contemplated in the merger agreement.
Who may vote. You may vote at the Andrew
special meeting if you owned Andrew common stock at the close of
business on the Andrew record date, , 2006. On
that date, there were shares of Andrew common
stock outstanding and entitled to vote. You may cast one vote
for each share of Andrew common stock that you owned on the
Andrew record date.
What vote is needed. The affirmative vote in
person or by proxy of the holders of a majority of the voting
power of the shares of Andrew common stock issued and
outstanding on the Andrew record date is required to approve
Proposal No. 1. Approval of Proposal No. 2
requires the affirmative vote of the holders of a majority of
the votes cast in person or by proxy at the Andrew special
meeting, if a quorum is present.
Share Ownership of Management. As
of June 15, 2006, shares representing approximately
0.6% of the outstanding shares of Andrew common stock were held
by Andrews directors, executive officers and their
respective affiliates.
For further information regarding the Andrew special meeting,
see the section entitled The Andrew Special Meeting.
Recommendations
to Shareowners of ADC and Stockholders of Andrew
To ADC Shareholders: After careful
consideration, ADCs board of directors recommends that ADC
shareowners vote FOR Proposal No. 1
to approve the issuance of shares of ADC Andrew common stock in
the merger and FOR Proposal No. 2
to adjourn the ADC special meeting to solicit additional proxies
for approval of Proposal No. 1, if necessary. For
further information, see the section entitled The ADC
Special Meeting ADC Board Recommendation.
To Andrew Stockholders. After careful
consideration, Andrews board of directors recommends that
Andrew stockholders vote FOR
Proposal No. 1 to adopt the merger agreement and
FOR Proposal No. 2 to adjourn the
Andrew special meeting to solicit additional proxies for
approval of Proposal No. 1, if necessary. For further
information, see the section entitled The Andrew Special
Meeting Andrew Board Recommendation.
Structure
of the Merger
In the merger, Hazeltine Merger Sub, Inc., a wholly owned
subsidiary of ADC, will merge with and into Andrew, and Andrew
will become a wholly owned subsidiary of ADC. Immediately after
the effective time of the merger, ADC will change its name to
ADC Andrew, Inc. Holders of Andrew common stock,
options,
9
and warrants will become holders of ADC Andrew common stock,
options, and warrants, respectively, following the merger. The
shares of ADC Andrew common stock issued to Andrew stockholders
in connection with the merger are expected to represent
approximately 44% of the outstanding shares of ADC Andrew common
stock immediately following the consummation of the merger,
based on the number of shares of ADC common stock and Andrew
common stock outstanding on June 28, 2006 (including any
Andrew restricted stock units that will vest as a result of the
merger) assuming that no Andrew or ADC stock options or warrants
are exercised, or convertible notes converted, between
June 28, 2006 and the effective time of the merger. For
further information about the structure of the merger, see the
section entitled Andrew Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance General Description of
the Merger.
Conversion
of Andrew Shares in the Merger
Each share of Andrew common stock issued and outstanding
immediately prior to the completion of the merger, but excluding
shares of Andrew common stock held in the treasury of Andrew,
will be converted into the right to receive 0.57 shares of
ADC Andrew common stock. The merger agreement provides that this
exchange ratio shall be adjusted only in the event of certain
changes to the capital stock of either Andrew or ADC prior to
the merger, such as stock splits, reclassifications and other
similar changes. The exchange ratio will not be adjusted as a
result of any changes to the market price of ADC or Andrew
common stock. For further information, see the section entitled
Andrew Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance General Description of
the Merger.
Andrew
Stock Options, Warrant and Convertible Note
In the merger, all outstanding Andrew employee stock options and
other stock-based awards will be converted into options and
stock-based awards of ADC Andrew, and those options and awards
will entitle the holder to receive ADC Andrew common stock. The
number of shares issuable under those options and awards, and
the exercise prices for those options and awards, will be
adjusted based on the merger exchange ratio of 0.57 shares
of ADC Andrew common stock for every share of Andrew common
stock. The number of shares will be rounded down to nearest
whole number of shares, and the exercise price will be rounded
up to the nearest whole cent. Pursuant to the terms of the
Andrew stock plans, outstanding and unexercised options to
purchase shares of Andrew common stock will fully vest at the
effective time of the merger.
The outstanding warrant, dated January 16, 2004, to
purchase 1,000,000 shares of Andrew common stock originally
issued to True Position, Inc., which we refer to as the Andrew
warrant, will be converted into a right to purchase ADC Andrew
common stock. The number of ADC Andrew shares issuable under the
Andrew warrant and the exercise price for the Andrew warrant
will be adjusted based on the merger exchange ratio of
0.57 shares of ADC Andrew common stock for every share of
Andrew common stock.
The
31/4% convertible
subordinated notes, due 2013, issued by Andrew, which we refer
to as the Andrew notes, will cease to be convertible into Andrew
common stock and will become convertible into ADC Andrew common
stock. The number of ADC Andrew shares into which each Andrew
note is convertible will be adjusted based on the merger
exchange ratio of 0.57 shares of ADC Andrew common stock
for every share of Andrew common stock.
For further information see the sections entitled The
Merger Agreement Treatment of Stock Options and
Restricted Stock Units, Treatment of
Andrew Warrant and Andrew Notes, and
Conditions to Completion of the Merger.
ADC
Andrew Board of Directors
In connection with the merger, four members of ADCs board
of directors (James C. Castle, Ph.D., John E. Rehfeld,
Jean-Pierre Rosso and John D. Wunsch) will resign effective as
of the effective time of the merger. Four members of
Andrews board of directors (Gerald A. Poch, Anne F.
Pollack, Glen O. Toney and Andrea L. Zopp) will be elected and
join eight members of ADCs board of directors (John A.
Blanchard III, John J. Boyle III, Mickey P. Foret, J.
Kevin Gilligan, Lois M. Martin, William R. Spivey, Ph.D.,
Robert E. Switz and Larry W. Wangberg) to form the ADC Andrew
board of directors immediately after the closing of the merger.
By approving ADC Proposal No. 1, and assuming the
merger closes, ADC shareowners, as an integral part of
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the merger, will be electing four members of the Andrew board of
directors to fill the vacancies on the ADC Andrew board created
by the resignations of the departing ADC directors. For further
information on the ADC Andrew board of directors, please see the
section entitled Andrew Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance ADC Andrew Board of
Directors.
Risk
Factors
In evaluating the merger agreement or the issuance of shares of
ADC Andrew common stock in the merger, you should read this
joint proxy statement/prospectus carefully and especially
consider the factors discussed in the section entitled
Risk Factors.
Reasons
for the Merger
ADC. In reaching its decision to approve the
merger, ADCs board of directors consulted with senior
management and its financial and legal advisors and considered a
number of material factors. ADCs management believes that
the combination of ADC and Andrew represents an opportunity to
combine ADCs leading wireline connectivity solutions with
Andrews leading wireless infrastructure solutions to
create a global leader in communications network infrastructure
products with greater customer and product diversity as well as
greater financial resources than could have been achieved by ADC
alone. For further information about ADCs reasons for the
merger, see the section entitled Andrew
Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance Reasons for the
Merger.
Andrew. In reaching its decision to approve
the merger, Andrews board of directors consulted with
senior management and its financial and legal advisors and
considered a number of material factors. Andrews
management believes that the merger is an opportunity to combine
ADCs leadership position in wireline connectivity
solutions and Andrews leadership position in wireless
infrastructure solutions, providing the combined company with a
substantially greater global presence, customer base, economies
of scale, product breadth, innovation ability and financial
strength. For further information about Andrews reasons
for the merger, see the section entitled Andrew
Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance Reasons for the
Merger.
Opinion
of ADCs Financial Advisor
Pursuant to the terms of an engagement letter dated May 12,
2006, ADC retained Dresdner Kleinwort Wasserstein Securities
LLC, which we refer to as DrKW, as a financial advisor in
connection with the proposed merger. At the meeting of the board
of directors of ADC on May 30, 2006, DrKW rendered its oral
opinion to the board of directors of ADC, subsequently confirmed
in writing, that, as of such date, the exchange ratio provided
for pursuant to the terms of the merger agreement was fair to
ADC from a financial point of view. The full text of DrKWs
opinion to the board of directors of ADC, which sets forth,
among other things, the procedures followed, assumptions made,
matters considered and limitations on the review undertaken, is
attached to this joint proxy statement/prospectus as
Annex B and is incorporated into this joint proxy
statement/prospectus by reference. We encourage you to read both
this opinion and the section entitled Andrew
Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance Opinion of ADCs
Financial Advisor carefully and in their entirety.
DrKWs opinion is addressed to the board of directors of
ADC and relates only to the fairness from a financial point of
view to ADC of the exchange ratio in the merger. DrKWs
opinion does not address any other aspect of the proposed merger
or any related transaction and does not constitute a
recommendation to any shareholder as to any matter relating to
the merger. The summary of DrKWs opinion in this joint
proxy statement/prospectus is qualified in its entirety by
reference to the full text of the opinion. DrKW has consented to
the inclusion of and references to its opinion in this joint
proxy statement/prospectus, which consent is filed as an exhibit
to the registration statement of which this joint proxy
statement/prospectus forms a part.
Opinion
of Andrews Financial Advisor
On May 30, 2006, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, which we refer to as Merrill Lynch,
delivered to Andrews board of directors its oral opinion,
which opinion was subsequently confirmed in
11
writing, to the effect that, as of that date and based upon the
assumptions made, matters considered and limits of review set
forth in its written opinion, the exchange ratio pursuant to the
merger of 0.57 was fair, from a financial point of view, to the
holders of Andrew common stock. A copy of Merrill Lynchs
written opinion is attached to this joint proxy
statement/prospectus as Annex C. Merrill Lynch was not
requested to and did not provide any financial advisory services
to Andrew in connection with the merger, including advice
concerning the structure, the specific amount of the exchange
ratio, or any other aspects of the merger, other than the
delivery of its opinion. Merrill Lynch did not participate in
negotiations with respect to the exchange ratio or the other
terms of the merger or the agreement. We encourage you to read
carefully both the section entitled Andrew
Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance Opinion of Andrews
Financial Advisor and the opinion itself in its entirety
for a description of the assumptions made, matters considered
and limits on the scope of review undertaken by Merrill Lynch.
Merrill Lynchs opinion was intended for the use and
benefit of Andrews board of directors, does not address
the merits of the underlying decision by Andrew to enter into
the merger agreement or any of the transactions contemplated
thereby, including the merger, and does not constitute a
recommendation to any Andrew stockholder as to how that
stockholder should vote on the merger or any related matter.
Interests
of Andrew Directors and Executive Officers
When considering the recommendations by the Andrew board of
directors, you should be aware that a number of Andrews
executive officers and directors have interests in the merger
that are different from those of other Andrew stockholders. For
further information, see the section entitled Andrew
Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance Interests of Andrew
Directors and Executive Officers in the Merger.
Restrictions
on Sales of Shares to be Received in the Merger
The shares of ADC Andrew common stock to be issued in the merger
and received by persons who are deemed to be
affiliates of Andrew on the date of the Andrew
special meeting may be resold by them only in transactions
permitted by the resale provisions of Rule 145 under the
Securities Act, or otherwise permitted under the Securities Act.
For further information, see the section entitled Andrew
Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance Restrictions on Sales of
Shares to be Received in the Merger.
No
Solicitation
ADC and Andrew have agreed to a number of limitations with
respect to soliciting, negotiating and discussing acquisition
proposals involving persons other than Andrew or ADC, as
applicable, and to certain related matters. For further
information regarding these limitations, see the section
entitled The Merger
Agreement Covenants.
Conditions
to the Merger
The respective obligations of ADC and Andrew to consummate the
merger are subject to the satisfaction or waiver of certain
conditions. For further information about the conditions, see
the section entitled The Merger
Agreement Conditions to Completion of the
Merger.
Termination
Either ADC or Andrew can terminate the merger agreement under
certain circumstances, which would prevent the merger from being
consummated. For further information, see the section entitled
The Merger Agreement Termination of the
Merger Agreement.
A termination fee of $75 million may be payable by either
ADC or Andrew to the other party upon the termination of the
merger agreement under certain circumstances. For further
information about the termination fee, see the section entitled
The Merger Agreement Termination
Fee.
12
Expenses
Subject to limited exceptions, all fees and expenses incurred in
connection with the merger agreement will be paid by the party
incurring such expenses. ADC and Andrew will share equally all
fees and expenses, other than attorneys fees, incurred in
connection with the filing by the parties of the premerger
notification and report forms relating to the merger under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, which we
refer to as the HSR Act, and any foreign antitrust or
competition laws. For further information, see the section
entitled The Merger
Agreement Covenants.
Material
Federal Income Tax Consequences of the Merger
ADC and Andrew each anticipate that the merger will qualify as a
reorganization within the meaning of
Section 368(a) of the Code. It is a condition to completion
of the merger that ADC receive an opinion from Dorsey &
Whitney LLP and Andrew receive an opinion from Mayer, Brown,
Rowe & Maw LLP, in each case dated as of the effective
time of the merger, both to the effect that the merger will
qualify as such a reorganization. If the merger qualifies as a
reorganization, an Andrew stockholder generally will not
recognize any gain or loss for U.S. federal income tax
purposes upon the exchange of its shares of Andrew common stock
for shares of ADC Andrew common stock. However, any cash
received for a fractional share will result in the recognition
of gain or loss as if such stockholder sold its fractional
share. An Andrew stockholders aggregate adjusted tax basis
in the shares of ADC Andrew common stock that it receives in the
merger generally will equal its current aggregate adjusted tax
basis in its Andrew common stock (reduced by the portion of such
adjusted tax basis allocable to any fractional share interest
for which it receives cash). For further information, see the
section entitled Material United States Federal Income Tax
Consequences.
Tax matters can be complicated, and the tax consequences of
the merger to you will depend on the facts of your own
situation. You should consult your own tax advisors to fully
understand the tax consequences of the merger to you, including
the applicability and effect of federal, state, local and
foreign income and other tax laws.
Regulatory
Approvals
To consummate the merger, ADC and Andrew must make filings and
obtain approvals or clearances from antitrust regulatory
authorities in the United States, the European Union, and other
countries. In the United States, ADC must also comply with
applicable federal and state securities laws and the rules and
regulations of Nasdaq in connection with the issuance of shares
of ADC Andrew common stock in the merger and the filing of this
joint proxy statement/prospectus with the SEC. For further
information, see the section entitled Andrew
Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance Regulatory Approvals
Required for the Merger.
Anticipated
Accounting Treatment of the Merger
The merger will be accounted for as a purchase transaction by
ADC for financial reporting and accounting purposes under
U.S. generally accepted accounting principles. The results
of operations of Andrew will be included in the consolidated
financial statements of ADC Andrew from and after the
consummation of the merger. For further information, see the
section entitled Andrew Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance Anticipated Accounting
Treatment of the Merger.
Dissenters
or Appraisal Rights
Holders of ADC common stock are not entitled to dissenters
rights under the Minnesota Business Corporations Act in
connection with the issuance of ADC Andrew common stock in the
merger. Holders of Andrew common stock are not entitled to
appraisal rights under the Delaware General Corporation Law in
connection with the merger. For further information, see the
sections entitled The ADC Special
Meeting Dissenters Rights,
The Andrew Special Meeting Appraisal
Rights and Andrew Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance Dissenters or
Appraisal Rights.
13
MARKET
PRICE AND DIVIDEND INFORMATION
ADC common stock and Andrew common stock are listed on the
Nasdaq Global Market under the symbols ADCT and
ANDW, respectively. The following tables present,
for the periods indicated, the range of high and low per share
sales prices for ADC common stock and the range of high and low
closing prices of Andrew common stock as reported on the Nasdaq
Global Market. All of the sales prices for shares of ADC common
stock listed below have been adjusted to reflect the reverse
stock split ADC effected on May 10, 2005. Neither ADC nor
Andrew has ever declared or paid any cash dividend on shares of
its common stock.
ADCs fiscal year ends on October 31, and
Andrews fiscal year ends on September 30.
ADC
Common Stock
|
|
|
|
|
|
|
|
|
|
|
High
|
|
|
Low
|
|
|
Fiscal Year Ended October 31,
2004
|
|
|
|
|
|
|
|
|
First Quarter
(11/1/2003-1/31/2004)
|
|
$
|
26.95
|
|
|
$
|
16.24
|
|
Second Quarter (2/1/2004-4/30/2004)
|
|
$
|
25.27
|
|
|
$
|
16.24
|
|
Third Quarter (5/1/2004-7/31/2004)
|
|
$
|
19.95
|
|
|
$
|
14.70
|
|
Fourth Quarter
(8/1/2004-10/31/2004)
|
|
$
|
17.08
|
|
|
$
|
12.25
|
|
Fiscal Year Ended October 31,
2005
|
|
|
|
|
|
|
|
|
First Quarter (11/1/2004-1/28/2005)
|
|
$
|
19.88
|
|
|
$
|
14.70
|
|
Second Quarter
(1/29/2005-4/29/2005)
|
|
$
|
18.20
|
|
|
$
|
12.88
|
|
Third Quarter (4/30/2005-7/29/2005)
|
|
$
|
26.27
|
|
|
$
|
15.33
|
|
Fourth Quarter
(7/30/2005-10/31/2005)
|
|
$
|
27.14
|
|
|
$
|
16.95
|
|
Fiscal Year Ending
October 31, 2006
|
|
|
|
|
|
|
|
|
First Quarter (11/1/2005-1/27/2006)
|
|
$
|
25.88
|
|
|
$
|
17.21
|
|
Second Quarter
(1/28/2006-4/28/2006)
|
|
$
|
27.90
|
|
|
$
|
22.30
|
|
Third Quarter to date
(4/29/2006-6/27/2006)
|
|
$
|
23.67
|
|
|
$
|
15.84
|
|
Andrew
Common Stock
|
|
|
|
|
|
|
|
|
|
|
High
|
|
|
Low
|
|
|
Fiscal Year Ended
September 30, 2004
|
|
|
|
|
|
|
|
|
First Quarter
(10/1/2003-12/31/2003)
|
|
$
|
13.76
|
|
|
$
|
10.05
|
|
Second Quarter (1/1/2004-3/31/2004)
|
|
$
|
18.83
|
|
|
$
|
12.36
|
|
Third Quarter (4/1/2004-6/30/2004)
|
|
$
|
21.26
|
|
|
$
|
16.58
|
|
Fourth Quarter (7/1/2004-9/30/2004)
|
|
$
|
19.92
|
|
|
$
|
9.40
|
|
Fiscal Year Ended
September 30, 2005
|
|
|
|
|
|
|
|
|
First Quarter
(10/1/2004-12/31/2004)
|
|
$
|
15.33
|
|
|
$
|
12.51
|
|
Second Quarter (1/1/2005-3/31/2005)
|
|
$
|
13.62
|
|
|
$
|
11.32
|
|
Third Quarter (4/1/2005-6/30/2005)
|
|
$
|
13.91
|
|
|
$
|
11.03
|
|
Fourth Quarter (7/1/2005-9/30/2005)
|
|
$
|
13.93
|
|
|
$
|
10.67
|
|
Fiscal Year Ending
September 30, 2006
|
|
|
|
|
|
|
|
|
First Quarter
(10/1/2005-12/31/2005)
|
|
$
|
11.57
|
|
|
$
|
10.21
|
|
Second Quarter (1/1/2006-3/31/2006)
|
|
$
|
13.74
|
|
|
$
|
10.62
|
|
Third Quarter to date
(4/1/2006-6/27/2006)
|
|
$
|
12.24
|
|
|
$
|
8.75
|
|
14
The following table presents the closing sales price per share
of ADC common stock and Andrew common stock, as reported on the
Nasdaq Global Market, and the estimated equivalent per share
price (as explained below) of Andrew common stock on
May 30, 2006, the last full trading day before the public
announcement of the proposed merger, and on June 27, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
Andrew
|
|
|
Equivalent Andrew
|
|
|
|
ADC Common Stock
|
|
|
Common Stock
|
|
|
per Share Price
|
|
|
May 30, 2006
|
|
$
|
22.38
|
|
|
$
|
9.78
|
|
|
$
|
12.76
|
|
June 27, 2006
|
|
|
16.12
|
|
|
|
8.75
|
|
|
|
9.19
|
|
The estimated equivalent per share price of a share of Andrew
common stock equals the exchange ratio of 0.57 multiplied by the
price of a share of ADC common stock. You may use this
calculation to determine what your shares of Andrew common stock
will be worth if the merger is consummated. If the merger had
occurred on June 27, 2006, you would have received a number
of shares of ADC Andrew common stock worth $9.19 for each share
of Andrew common stock you owned. The actual equivalent per
share price of a share of ADC Andrew common stock that you will
receive if the merger is consummated may be different from this
price because the per share price of ADC common stock on the
Nasdaq Global Market fluctuates continuously.
Following the consummation of the merger, ADC Andrew common
stock will continue to be listed on the Nasdaq Global Market,
and there will be no further market for the Andrew common stock.
15
SELECTED
HISTORICAL FINANCIAL DATA OF ADC
The following statements of operations data for each of the
three years in the period ended October 31, 2005 and the
balance sheet data as of October 31, 2005 and 2004 have
been derived from ADCs audited consolidated financial
statements contained in its Annual Report on
Form 10-K
for the fiscal year ended October 31, 2005, which is
incorporated into this joint proxy statement/prospectus by
reference, after considering the impact of the reclassifications
discussed in note 1 below. The statements of operations
data for the fiscal years ended October 31, 2002 and 2001
and the balance sheet data as of October 31, 2003, 2002 and
2001 have been derived from ADCs audited consolidated
financial statements for such years, after considering the
impact of the reclassifications discussed in note 1 below,
which have not been incorporated into this joint proxy
statement/prospectus by reference. The statements of operations
data for each of the six month periods ended April 28, 2006
and April 29, 2005 and the balance sheet data as of
April 28, 2006 have been derived from ADCs unaudited
consolidated financial statements, which are contained in
ADCs Quarterly Report on
Form 10-Q
for the period ended April 28, 2006, which is incorporated
into this joint proxy statement/prospectus by reference. The
historical financial information of ADC does not include the
results for each of Fiber Optic Network Solutions Corp, a
company ADC acquired in fiscal 2005, for any date prior to
August 26, 2005, OpenCell, Corp., a company ADC acquired in
fiscal 2005, for any date prior to May 6, 2005, or KRONE
Group, a group of companies ADC acquired in fiscal 2004, for any
date prior to May 18, 2004. ADCs historical book
value per share is computed by dividing total shareowners
investment by the number of common shares outstanding at the end
of the period.
You should read this selected historical financial data together
with the financial statements and their accompanying notes and
managements discussion and analysis of operations and
financial condition of ADC contained in such reports that are
incorporated by reference into this joint proxy
statement/prospectus.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28,
|
|
|
April 29,
|
|
|
Fiscal Year Ended
October 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
2001
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share
data)
|
|
|
Historical Consolidated
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales(1)
|
|
$
|
647.4
|
|
|
$
|
554.1
|
|
|
$
|
1,172.7
|
|
|
$
|
774.8
|
|
|
$
|
580.1
|
|
|
$
|
803.7
|
|
|
$
|
2,104.6
|
|
Gross profit
|
|
|
206.1
|
|
|
|
199.0
|
|
|
|
420.9
|
|
|
|
302.3
|
|
|
|
208.0
|
|
|
|
161.6
|
|
|
|
625.6
|
|
Income (loss) from continuing
operations(2)
|
|
|
20.4
|
|
|
|
48.9
|
|
|
|
85.5
|
|
|
|
33.6
|
|
|
|
(39.8
|
)
|
|
|
(977.4
|
)
|
|
|
(1,151.3
|
)
|
Net income (loss)(2)
|
|
|
21.0
|
|
|
|
85.9
|
|
|
|
110.7
|
|
|
|
16.4
|
|
|
|
(76.7
|
)
|
|
|
(1,145.0
|
)
|
|
|
(1,287.7
|
)
|
Net income (loss) available to
common shareowners(2)
|
|
|
21.0
|
|
|
|
85.9
|
|
|
|
110.7
|
|
|
|
16.4
|
|
|
|
(76.7
|
)
|
|
|
(1,145.0
|
)
|
|
|
(1,287.7
|
)
|
Income (loss) per common
share basic(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.18
|
|
|
$
|
0.42
|
|
|
$
|
0.74
|
|
|
$
|
0.29
|
|
|
$
|
(0.35
|
)
|
|
$
|
(8.60
|
)
|
|
$
|
(10.24
|
)
|
Net income (loss)
|
|
$
|
0.18
|
|
|
$
|
0.74
|
|
|
$
|
0.95
|
|
|
$
|
0.14
|
|
|
$
|
(0.67
|
)
|
|
$
|
(10.07
|
)
|
|
$
|
(11.45
|
)
|
Income (loss) per common
share diluted(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.18
|
|
|
$
|
0.40
|
|
|
$
|
0.72
|
|
|
$
|
0.29
|
|
|
$
|
(0.35
|
)
|
|
$
|
(8.60
|
)
|
|
$
|
(10.24
|
)
|
Net income (loss)
|
|
$
|
0.18
|
|
|
$
|
0.69
|
|
|
$
|
0.91
|
|
|
$
|
0.14
|
|
|
$
|
(0.67
|
)
|
|
$
|
(10.07
|
)
|
|
$
|
(11.45
|
)
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 28,
|
|
|
As of October 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
2001
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share
data)
|
|
|
Historical Consolidated Balance
Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,568.5
|
|
|
$
|
1,537.2
|
|
|
$
|
1,428.1
|
|
|
$
|
1,296.9
|
|
|
$
|
1,144.2
|
|
|
$
|
2,499.7
|
|
Total long-term obligations
|
|
|
481.9
|
|
|
|
474.5
|
|
|
|
466.8
|
|
|
|
402.4
|
|
|
|
11.7
|
|
|
|
2.1
|
|
Book value per share(3)
|
|
|
6.92
|
|
|
|
6.64
|
|
|
|
5.70
|
|
|
|
5.45
|
|
|
|
6.41
|
|
|
|
16.73
|
|
|
|
|
(1) |
|
Freight revenues for our APS business unit previously were
netted with freight costs in cost of goods sold on our
statements of operations. During the second quarter of fiscal
year 2006, freight revenues were reported separately in net
sales resulting in reclassifications of $3.5 million,
$1.4 million, $0.3 million, $0.3 million and
$1.4 million for fiscal years 2005, 2004, 2003, 2002 and
2001, respectively. |
|
(2) |
|
Effective November 1, 2005, ADC adopted Statement of
Financial Accounting Standards No. 123(R), Share-Based
Payment: An amendment of FASB Statements No. 123 and
95, which requires ADC to recognize in the statements of
operations the grant-date fair value of stock options and other
equity-based compensation issued to employees. In accordance
with the modified prospective transition method, prior periods
have not been restated to reflect the impact of
SFAS 123(R). The incremental reduction of income from
continuing operations of adopting SFAS 123(R) was
$5.1 million for the six months ended April 28, 2006.
For further information regarding ADCs adoption of
SFAS 123(R), see Note 2 contained in ADCs
quarterly report on
Form 10-Q
for the period ended April 28, 2006 which is incorporated
into this joint proxy statement/prospectus by reference. |
|
(3) |
|
On April 18, 2005, ADC announced a
one-for-seven
reverse split of its common stock. The effective date of the
reverse split was May 10, 2005. All share, share equivalent
and per share amounts have been adjusted to reflect the reverse
stock split for all periods presented. |
17
SELECTED
HISTORICAL FINANCIAL DATA OF ANDREW
The following statements of operations data for each of the
three years in the period ended September 30, 2005 and the
balance sheet data as of September 30, 2005 and 2004 have
been derived from Andrews audited consolidated financial
statements contained in its Annual Report on
Form 10-K
for the fiscal year ended September 30, 2005, which is
incorporated into this joint proxy statement/prospectus by
reference. The statements of operations data for the fiscal
years ended September 30, 2002 and 2001 and the balance
sheet data as of September 30, 2003, 2002 and 2001 have
been derived from Andrews audited consolidated financial
statements for such years, which have not been incorporated into
this joint proxy statement/prospectus by reference. The
statements of operations data for each of the six month periods
ended March 31, 2006 and 2005 and the balance sheet data as
of March 31, 2006 have been derived from Andrews
unaudited consolidated financial statements, which are contained
in Andrews Quarterly Report on
Form 10-Q
for the period ended March 31, 2006 and incorporated into
this joint proxy statement/prospectus by reference. The
historical financial information of Andrew does not include the
results of Allen Telecom, Inc. for any date prior to
July 15, 2003 or Celiant for any date prior to June 4,
2002. Andrews historical book value per share is computed
by dividing total stockholders equity less preferred stock
by the number of Andrew common shares outstanding at the end of
the period.
You should read this selected historical financial data together
with the financial statements that are incorporated by reference
into this joint proxy statement/prospectus and their
accompanying notes and managements discussion and analysis
of operations and financial condition of Andrew contained in
such reports.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
March 31,
|
|
|
Fiscal Year Ended
September 30,
|
|
|
|
2006
|
|
|
2005
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
2001
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share
data)
|
|
|
Historical Consolidated
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
996.3
|
|
|
$
|
955.6
|
|
|
$
|
1,961.2
|
|
|
$
|
1,828.4
|
|
|
$
|
1,011.7
|
|
|
$
|
864.8
|
|
|
$
|
935.3
|
|
Gross profit
|
|
|
216.4
|
|
|
|
207.7
|
|
|
|
436.8
|
|
|
|
443.3
|
|
|
|
272.3
|
|
|
|
237.7
|
|
|
|
309.9
|
|
Income from continuing
operations(1)
|
|
|
18.4
|
|
|
|
18.3
|
|
|
|
38.9
|
|
|
|
28.9
|
|
|
|
17.0
|
|
|
|
10.5
|
|
|
|
68.9
|
|
Net income (loss)(1)
|
|
|
18.4
|
|
|
|
18.3
|
|
|
|
38.9
|
|
|
|
28.9
|
|
|
|
13.9
|
|
|
|
(26.4
|
)
|
|
|
61.6
|
|
Preferred stock dividends
|
|
|
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.7
|
|
|
|
6.5
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to
common stockholders(1)
|
|
|
18.4
|
|
|
|
18.1
|
|
|
|
38.7
|
|
|
|
28.2
|
|
|
|
7.4
|
|
|
|
(26.4
|
)
|
|
|
61.6
|
|
Income (loss) per common
share basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.12
|
|
|
$
|
0.11
|
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
$
|
0.10
|
|
|
$
|
0.12
|
|
|
$
|
0.85
|
|
Net income (loss)
|
|
$
|
0.12
|
|
|
$
|
0.11
|
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
$
|
0.07
|
|
|
$
|
(0.30
|
)
|
|
$
|
0.76
|
|
Income (loss) per common
share diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
$
|
0.10
|
|
|
$
|
0.12
|
|
|
$
|
0.85
|
|
Net income (loss)
|
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.24
|
|
|
$
|
0.18
|
|
|
$
|
0.07
|
|
|
$
|
(0.30
|
)
|
|
$
|
0.76
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
As of
September 30,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
2001
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share
data)
|
|
|
Historical Consolidated Balance
Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,308.2
|
|
|
$
|
2,311.0
|
|
|
$
|
2.239.7
|
|
|
$
|
2,074.2
|
|
|
$
|
1,123.7
|
|
|
$
|
857.7
|
|
Total long-term obligations
|
|
|
318.2
|
|
|
|
324.9
|
|
|
|
339.2
|
|
|
|
375.3
|
|
|
|
41.9
|
|
|
|
77.7
|
|
Redeemable preferred stock
|
|
|
|
|
|
|
|
|
|
|
6.0
|
|
|
|
9.2
|
|
|
|
|
|
|
|
|
|
Book value per share
|
|
|
9.76
|
|
|
|
9.64
|
|
|
|
9.39
|
|
|
|
8.93
|
|
|
|
8.61
|
|
|
|
7.37
|
|
|
|
|
(1) |
|
Effective October 1, 2005, Andrew adopted Statement of
Financial Accounting Standards No. 123(R), Share-Based
Payment: An amendment of FASB Statements No. 123 and
95, which requires Andrew to recognize in the statement of
operations the grant-date fair value of stock options and other
equity-based compensation issued to employees. In accordance
with the modified prospective transition method, prior periods
have not been restated to reflect the impact of
SFAS 123(R). The incremental reduction of income from
continuing operations of adopting SFAS 123(R) was
$1.1 million for the six months ended March 31, 2006.
For further information regarding Andrews adoption of
SFAS 123(R), see Note 7 contained in Andrews
quarterly report on
Form 10-Q
for the period ended March 31, 2006 which is incorporated
into this joint proxy statement/prospectus by reference. |
19
SELECTED
UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL DATA
As of and for the Six Months Ended April 28, 2006
The following table sets forth selected unaudited pro forma
condensed combined financial data of ADC and Andrew as of and
for the six months ended April 28, 2006. The pro forma
amounts in the table below are based on the historical financial
statements of ADC and Andrew adjusted to give effect to the
merger. The pro forma amounts are prepared using the purchase
method of accounting, with ADC treated as the acquirer and as if
the acquisition had been completed on November 1, 2004 for
statement of operations purposes and April 28, 2006
for balance sheet purposes. Because Andrews fiscal year
ends September 30, the pro forma statement of operations
for the six months ended April 28, 2006 is based on
Andrews six months ended March 31, 2006. These pro
forma amounts have been derived from (a) the unaudited
consolidated financial statements of ADC contained in its
Quarterly Report on
Form 10-Q
for the quarter ended April 28, 2006, which is incorporated
by reference into this document, and (b) the unaudited
consolidated financial statements of Andrew contained in its
Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2006, which is incorporated
by reference into this document.
The pro forma financial data in the table below is not intended
to represent or be indicative of the consolidated results of
operations or financial condition of the combined company that
would have been reported had the merger been completed as of the
dates presented, and should not be taken as representative of
the future consolidated results of operations or financial
condition of the combined company.
As of the date of this joint proxy statement/prospectus, ADC has
not performed the detailed valuation studies necessary to arrive
at the required estimates of the fair market value of the Andrew
assets to be acquired and the liabilities to be assumed and the
related allocations of purchase price, nor has ADC identified
the adjustments necessary, if any, to conform Andrew data to ADC
accounting policies. As indicated in Note 2 to the
Unaudited Pro Forma Condensed Combined Financial Statements, ADC
has made certain adjustments to the historical book values of
the assets and liabilities of Andrew to reflect certain
preliminary estimates of the fair values necessary to prepare
the Unaudited Pro Forma Condensed Combined Financial Statements,
with the excess of the purchase price over the historical net
assets of Andrew, as adjusted to reflect estimated fair values,
recorded as goodwill. Actual results will differ from these
Unaudited Pro Forma Condensed Combined Financial Statements once
ADC has determined the final purchase price for Andrew, has
completed the valuation studies necessary to finalize the
required purchase price allocations and has identified any
necessary conforming accounting changes for Andrew. There can be
no assurance that such finalization will not result in material
changes.
The pro forma financial data in the table below does not include
the realization of future cost savings from synergies or
restructuring costs expected to result from the merger with
Andrew. The pro forma financial data should be read in
conjunction with the historical consolidated financial
statements and accompanying notes of ADC and Andrew incorporated
by reference into this joint proxy statement/prospectus.
20
The pro forma combined book value per share is computed by
dividing total pro forma shareowners investment by the pro
forma number of common shares outstanding at the end of the
period.
|
|
|
|
|
|
|
As of and for the
|
|
|
|
Six Months Ended
|
|
|
|
April 28, 2006
|
|
|
|
(In millions,
|
|
|
|
except per
|
|
|
|
share amounts)
|
|
|
Net sales
|
|
$
|
1,643.7
|
|
Gross profit
|
|
|
422.8
|
|
Income from continuing operations
|
|
|
43.6
|
|
Basic income per share from
continuing operations
|
|
|
0.21
|
|
Diluted income per share from
continuing operations
|
|
|
0.21
|
|
Total assets
|
|
|
4,182.0
|
|
Total long-term obligations
|
|
|
843.2
|
|
Book value per share
|
|
|
12.40
|
|
21
SELECTED
UNAUDITED PRO FORMA
For the Year Ended October 31, 2005
The following table sets forth selected unaudited pro forma
condensed combined financial data of ADC and Andrew for the
fiscal year ended October 31, 2005. The pro forma amounts
in the table below are based on the historical financial
statements of ADC and Andrew adjusted to give effect to the
merger. The pro forma amounts are prepared using the purchase
method of accounting, with ADC treated as the acquirer and as if
the acquisition had been completed on November 1, 2004 for
statement of operations purposes. Because Andrews fiscal
year ends September 30, the pro forma statement of
operations for the fiscal year ended October 31, 2005 is
based on Andrews statement of operations for its fiscal
year ended September 30, 2005. These pro forma amounts have
been derived from (a) the audited consolidated financial
statements of ADC contained in its Annual Report on
Form 10-K
for the fiscal year ended October 31, 2005, which is
incorporated by reference into this document, and (b) the
audited consolidated financial statements of Andrew contained in
its Annual Report on
Form 10-K
for the fiscal year ended September 30, 2005, which is
incorporated by reference into this document.
The pro forma financial data in the table below is not intended
to represent or be indicative of the consolidated results of
operations or financial condition of the combined company that
would have been reported had the merger been completed as of the
dates presented, and should not be taken as representative of
the future consolidated results of operations or financial
condition of the combined company.
As of the date of this joint proxy statement/prospectus, ADC has
not performed the detailed valuation studies necessary to arrive
at the required estimates of the fair market value of the Andrew
assets to be acquired and the liabilities to be assumed and the
related allocations of purchase price, nor has ADC identified
the adjustments necessary, if any, to conform Andrew data to ADC
accounting policies. As indicated in Note 2 to the
Unaudited Pro Forma Condensed Combined Financial Statements, ADC
has made certain adjustments to the historical book values of
the assets and liabilities of Andrew to reflect certain
preliminary estimates of the fair values necessary to prepare
the Unaudited Pro Forma Condensed Combined Financial Statements,
with the excess of the purchase price over the historical net
assets of Andrew, as adjusted to reflect estimated fair values,
recorded as goodwill. Actual results will differ from these
Unaudited Pro Forma Condensed Combined Financial Statements once
ADC has determined the final purchase price for Andrew, has
completed the valuation studies necessary to finalize the
required purchase price allocations and has identified any
necessary conforming accounting changes for Andrew. There can be
no assurance that such finalization will not result in material
changes.
The pro forma financial data in the table below does not include
the realization of future cost savings from synergies or
restructuring costs expected to result from the merger with
Andrew. The pro forma financial data should be read in
conjunction with the historical consolidated financial
statements and accompanying notes of ADC and Andrew incorporated
by reference into this joint proxy statement/prospectus.
|
|
|
|
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
|
October 31, 2005
|
|
|
|
(In millions,
|
|
|
|
except per
|
|
|
|
share amounts)
|
|
|
Net sales
|
|
$
|
3,133.9
|
|
Gross profit
|
|
|
858.5
|
|
Income from continuing operations
|
|
|
124.4
|
|
Basic income per share from
continuing operations
|
|
|
0.60
|
|
Diluted income per share from
continuing operations
|
|
|
0.60
|
|
22
UNAUDITED
COMPARATIVE HISTORICAL AND PER SHARE DATA
The following table summarizes unaudited per share information
for ADC and Andrew on a historical basis, a pro forma combined
basis for the combined company and an equivalent pro forma
combined basis for Andrew. It has been assumed for purposes of
the pro forma financial information provided below that the
merger was completed on November 1, 2004 for statements of
operations purposes and April 28, 2006 for balance sheet
purposes. As a result of different fiscal period ending dates,
the unaudited pro forma combined per share data for the six
months ended April 28, 2006 combines ADCs historical
information for the six months ended April 28, 2006 with
Andrews historical information for the six months ended
March 31, 2006. The unaudited pro forma combined per share
data for the fiscal year ended October 31, 2005 combines
ADCs historical information for the fiscal year ended
October 31, 2005 with Andrews historical information
for the fiscal year ended September 30, 2005. ADCs
historical book value per share is computed by dividing total
shareowners investment by the number of common shares
outstanding at the end of the period. Andrews historical
book value per share is computed by dividing total
stockholders equity by the number of common shares
outstanding at the end of the period. The pro forma combined
book value per share is computed by dividing total pro forma
shareowners investment by the pro forma number of common
shares outstanding at the end of the period. Andrews
equivalent pro forma combined per share amounts are calculated
by multiplying the pro forma combined per share amounts by 0.57,
the number of shares of ADC Andrew common stock that will be
exchanged for each Andrew common share in the merger.
You should read this per share data together with the respective
audited and unaudited financial statements and related notes of
ADC and Andrew that are incorporated by reference into this
joint proxy statement/prospectus and the unaudited pro forma
condensed financial information and notes related to such
consolidated financial statements included elsewhere in this
joint proxy statement/prospectus. The pro forma information
below is presented for illustrative purposes only and is not
necessarily indicative of the operating results or financial
position that would have occurred if the merger had been
completed as of the beginning of the period presented, nor is it
necessarily indicative of the future operating results or
financial position of the combined company.
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
April 28, 2006
|
|
|
October 31, 2005
|
|
|
ADC Historical
|
|
|
|
|
|
|
|
|
Historical per common share:
|
|
|
|
|
|
|
|
|
Basic income per share from
continuing operations
|
|
$
|
0.18
|
|
|
$
|
0.74
|
|
Diluted income per share from
continuing operations
|
|
|
0.18
|
|
|
|
0.72
|
|
Book value per share
|
|
|
6.92
|
|
|
|
6.64
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
March 31, 2006
|
|
|
September 30,
2005
|
|
|
Andrew Historical
|
|
|
|
|
|
|
|
|
Historical per common share:
|
|
|
|
|
|
|
|
|
Basic income per share from
continuing operations
|
|
$
|
0.12
|
|
|
$
|
0.24
|
|
Diluted income per share from
continuing operations
|
|
|
0.11
|
|
|
|
0.24
|
|
Book value per share
|
|
|
9.76
|
|
|
|
9.64
|
|
23
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
April 28, 2006
|
|
|
October 31, 2005
|
|
|
Unaudited Pro Forma
Combined
|
|
|
|
|
|
|
|
|
Unaudited pro forma per share of
ADC Andrew common shares:
|
|
|
|
|
|
|
|
|
Basic income per share from
continuing operations
|
|
$
|
0.21
|
|
|
$
|
0.60
|
|
Diluted income per share from
continuing operations
|
|
|
0.21
|
|
|
|
0.60
|
|
Book value per share
|
|
|
12.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
Fiscal Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
April 28, 2006
|
|
|
October 31, 2005
|
|
|
Unaudited Pro Forma Andrew
Equivalents
|
|
|
|
|
|
|
|
|
Unaudited pro forma per share of
ADC Andrew common shares:
|
|
|
|
|
|
|
|
|
Basic income per share from
continuing operations
|
|
$
|
0.12
|
|
|
$
|
0.34
|
|
Diluted income per share from
continuing operations
|
|
|
0.12
|
|
|
|
0.34
|
|
Book value per share
|
|
|
7.07
|
|
|
|
|
|
24
FORWARD-LOOKING
INFORMATION
This joint proxy statement/prospectus includes
forward-looking statements within the meaning of the
safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Words such as anticipate,
believes, budget, continue,
could, estimate, expect,
forecast, intend, may,
plan, potential, predicts,
project, should, will and
similar expressions are intended to identify such
forward-looking statements. Forward-looking statements in this
joint proxy statement/prospectus include, without limitation,
statements regarding forecasts of market growth, future revenue,
benefits of the proposed merger, expectations that the merger
will be accretive to ADC Andrews results, expectations of
cost synergies as a result of the merger, future expectations
concerning available cash and cash equivalents, and other
matters that involve known and unknown risks, uncertainties and
other factors that may cause actual results, levels of activity,
performance or achievements to differ materially from results
expressed in or implied by this joint proxy
statement/prospectus. Such risk factors include, among others:
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Difficulties we may encounter in integrating the merged
businesses.
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|
Uncertainties as to the timing of the merger, and the
satisfaction of closing conditions to the merger, including the
receipt of regulatory approvals.
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The receipt of required shareholder approvals.
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Whether certain markets will grow as anticipated.
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|
The competitive environment in the telecommunications industry
and competitive responses to the proposed merger.
|
|
|
|
Whether the companies can successfully develop new products on a
timely basis and the degree to which these gain market
acceptance.
|
Actual results may differ materially from those contained in the
forward-looking statements in this joint proxy
statement/prospectus. Additional information concerning these
and other risk factors is contained in ADCs and
Andrews most recently filed Annual Reports on
Form 10-K
and most recently filed Quarterly Reports on
Form 10-Q.
You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of
this joint proxy statement/prospectus. All forward-looking
statements are qualified in their entirety by this cautionary
statement.
25
RISK
FACTORS
Before you vote for the adoption of the ADC Andrew share
issuance or the merger agreement, as the case may be, you should
carefully consider the risks described in addition to the other
information contained in this joint proxy statement/prospectus,
including the section entitled Forward-Looking
Information. By voting in favor of the ADC Andrew share
issuance, ADC shareowners will be choosing to dilute their
shareholdings significantly in exchange for obtaining an
interest in the assets, liabilities and business of Andrew. By
voting in favor of the merger agreement and merger, Andrew
stockholders will be choosing to invest in ADC Andrew common
stock.
The risks and uncertainties described below are not the only
ones facing ADC or the combined company, ADC Andrew, after the
merger. If any of the following risks actually occur, the
business, financial condition or results of operations of ADC,
and ADC Andrew, after the merger, could be materially adversely
affected, the value of ADC Andrews common stock could
decline and you may lose all or part of your investment.
Risks
Related to the Merger
The
value of the shares of ADC Andrew common stock that Andrew
stockholders will receive in the merger will vary as a result of
the fixed exchange ratio and fluctuations in the price of
ADCs common stock.
At the effective time of the merger, each outstanding share of
Andrew common stock will be converted into the right to receive
0.57 shares of ADC Andrew common stock. The ratio at which
the shares will be converted is fixed and any changes in the
price of ADC common stock will affect the value of the merger
consideration that Andrew stockholders receive. Therefore, if
the price of ADC common stock declines prior to completion of
the merger, the value of the merger consideration to be received
by Andrew stockholders will decrease. In addition, you will not
know the exact value of the merger consideration at the time you
vote. Stock price variations may result from changes in the
business, operations or prospects of ADC, Andrew or the combined
company, market assessments of the likelihood that the merger
will be completed within the anticipated timeframe or at all,
general market and economic conditions and other factors which
are beyond the control of ADC or Andrew. Neither party may
terminate the merger agreement as a result of a change in the
share price of ADC or Andrew. Recent market prices of ADC common
stock and Andrew common stock are found under the heading
Market Price and Dividend Information and we
encourage Andrew stockholders to obtain current market
quotations for ADC common stock and Andrew common stock.
The historical prices of ADCs common stock and
Andrews common stock included in this joint proxy
statement/prospectus are not indicative of what their prices
will be on the date the merger becomes effective. The future
market prices of ADC common stock and Andrew common stock cannot
be guaranteed or predicted. Under the merger agreement, neither
ADC nor Andrew is permitted to terminate the merger agreement
solely because of changes in the market price of either
partys common stock.
ADC
and Andrew may be required to comply with material restrictions
or conditions in order to obtain the regulatory approvals to
complete the merger and any delays in obtaining regulatory
approvals will delay and may possibly prevent the
merger.
The merger is subject to review by the U.S. Department of
Justice and the U.S. Federal Trade Commission under the HSR
Act, and by certain antitrust authorities outside of the United
States. Under the HSR Act, ADC and Andrew are required to make
pre-merger notification filings and await the expiration or
early termination of the statutory waiting period prior to
completing the merger. ADC and Andrew filed a Notification and
Report Form pursuant to the HSR Act with the
U.S. Department of Justice and U.S. Federal Trade
Commission on June 13, 2006.
The governmental entities from which approvals are required may
attempt to condition their approvals of the merger on the
satisfaction of certain regulatory conditions that may have the
effect of imposing restrictions or additional costs on the
combined company. These conditions could include a complete or
partial license, divestiture, spin-off or the sale of certain
assets or businesses of either ADC or Andrew, which may be on
26
terms that are not as favorable to ADC as may have been
attainable absent the merger, or other restrictions on the
operation of the combined business. While ADC and Andrew expect
to obtain the required regulatory approvals, neither can be
certain that all of the required antitrust approvals will be
obtained, nor can the parties be certain that the approvals will
be obtained within the time limits contemplated by the merger
agreement. A delay in obtaining the required approvals will
delay and may possibly prevent the completion of the merger.
Each
of ADC and Andrew is subject to certain restrictions on the
conduct of its business under the terms of the merger
agreement.
Under the terms of the merger agreement, each of ADC and Andrew
has agreed to certain restrictions on the operations of their
businesses that are customary for transactions similar to the
merger. Each has agreed that it shall limit the conduct of its
business to those actions undertaken in the ordinary course of
business. In addition, each party has agreed not to undertake,
or has agreed to limit, certain corporate actions without the
consent of the other party. Among others, these actions include
mergers and acquisitions or dispositions of assets, making loans
to third parties, settling litigation matters of a certain size
and undertaking capital expenditures in excess of prescribed
limits. For a complete list of such restrictions, please see the
section entitled The Merger
Agreement Covenants.
Because of these restrictions, each of ADC and Andrew may not
have taken, and may not be able to undertake, certain actions
with respect to the conduct of its business that it might
otherwise have taken if not for the merger agreement.
The
anticipated benefits of combining ADC and Andrew may not be
realized.
ADC and Andrew entered into the merger agreement with the
expectation that the merger will result in various benefits
including, among other things, benefits relating to enhanced
revenues, a strengthened market position for the combined
company, cross-selling opportunities, technology and operating
efficiencies. Achieving the anticipated benefits of the merger
is subject to a number of uncertainties, including, but not
limited to, the ability of the combined company to manage
potential increases in commodities prices, whether ADC and
Andrew can otherwise integrate their respective businesses in an
efficient and effective manner, the reaction of existing or
potential competitors of the combined business to the
transaction, and general competitive factors in the marketplace.
Failure to achieve these anticipated benefits could result in
increased costs, decreases in the amount of expected revenues
and diversion of managements time and energy and could
materially impact ADC Andrews business, financial
condition and operating results.
ADC
Andrew may fail to realize the anticipated synergies and cost
savings expected from the merger.
The success of ADC Andrew after the merger will depend, in part,
on its ability to realize the anticipated growth opportunities
and cost savings from combining the businesses of ADC and
Andrew. ADC and Andrew expect that the merger will result in
cost synergies beginning in the first year after consummation of
the merger with preliminary estimated annual pre-tax cost
synergies beginning in the third year after consummation of the
merger of at least $70-80 million, with potential revenue
synergies presenting additional potential upside. Such cost
synergies are expected to be realized by consolidating and
integrating of certain functions as well as through the adoption
of best practices from both ADC and Andrew. However, to realize
such anticipated benefits, ADC and Andrew must successfully
combine their businesses in a manner that permits those
synergies to be realized. In addition, these synergies must be
achieved without adversely affecting revenues. If ADC Andrew is
not able to successfully achieve these objectives, such
anticipated benefits may not be realized fully, or at all, or
may take longer to realize than expected.
ADC
and Andrew may have difficulty integrating and may incur
substantial costs in connection with the
integration.
Achieving the anticipated benefits of the merger will depend on
the successful integration of ADCs and Andrews
products, services, operations, personnel, technology and
facilities in a timely and efficient manner.
27
Although neither ADC nor Andrew anticipates material
difficulties in connection with such integration, the
possibility exists that such difficulties could be experienced
in connection with the merger, especially given the relatively
large size of the merger. The time and expense associated with
converting the businesses of the combined company to a common
platform may exceed managements expectations and limit or
delay the intended benefits of the transaction. Similarly, the
process of combining sales and marketing forces, consolidating
administrative functions, and coordinating product and service
offerings can take longer, cost more, and provide fewer benefits
than initially projected. To the extent any of these events
occurs, the benefits of the transaction may be reduced, at least
for a period of time.
Integrating ADC and Andrew will be a complex, time-consuming and
expensive process. Before the merger, ADC and Andrew operated
independently, each with its own business, products, customers,
employees, culture and systems.
ADC and Andrew may face substantial difficulties, costs and
delays in integrating the two companies. These difficulties,
costs and delays may include:
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|
|
|
|
Potential difficulty in combining the separate technologies of
the combined company.
|
|
|
|
Perceived adverse changes in product offerings available to
customers or in customer service standards, whether or not these
changes do, in fact, occur.
|
|
|
|
Costs and delays in implementing common systems and procedures.
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|
|
|
Combining research and development teams and processes.
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|
|
|
Potential charges to earnings resulting from the application of
purchase accounting to the transaction.
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|
|
|
Difficulty comparing financial reports due to differing
financial
and/or
internal reporting systems.
|
|
|
|
Diversion of management resources from the business of the
combined company.
|
|
|
|
The retention of existing customers of each company.
|
|
|
|
Reduction or loss of customer orders due to the potential for
market confusion, hesitation and delay.
|
|
|
|
Retaining and integrating management and other key employees of
the combined company.
|
|
|
|
Coordinating infrastructure operations in an effective and
efficient manner.
|
|
|
|
Achieving the synergies anticipated to be realized from the
merger on the timeline presently anticipated, if at all.
|
After the merger, ADC Andrew may seek to combine certain
operations and functions using common information and
communication systems, operating procedures, financial controls
and human resource practices, including training, professional
development and benefit programs. ADC Andrew may be unsuccessful
in implementing the integration of these systems and processes.
Any one or all of these factors may cause increased operating
costs, worse than anticipated financial performance or the loss
of customers and employees. Many of these factors are also
outside the control of either company.
ADC
and Andrew may have difficulty integrating their respective
systems of internal control over financial
reporting.
The failure to integrate ADCs and Andrews systems of
internal control over financial reporting following the merger
could affect adversely the combined companys ability to
exercise effective internal control over financial reporting. A
failure by the combined company to exercise effective control
over financial reporting could result in a material misstatement
in the combined companys annual or interim consolidated
financial statements. In its report on internal controls over
financial reporting for the year ended September 30, 2005,
Andrews management indicated that Andrew and its
subsidiaries did not maintain effective internal control over
financial reporting as of September 30, 2005 due to certain
material weaknesses described in Andrews annual report on
Form 10-K
for the year ended September 30, 2005 as incorporated by
reference
28
into this joint proxy statement/prospectus. Andrew has
implemented changes in its internal controls to remedy the
material weaknesses identified by management. However,
Andrews independent registered public accounting firm has
not yet audited the remediated controls and no assurance can be
given that the measures taken are adequate to maintain effective
control over Andrews financial reporting process.
ADC
and Andrew both depend on key personnel, and the loss of any of
these key personnel because of uncertainty regarding the merger,
either before or after the merger, could hurt the businesses of
the combined company.
ADC and Andrew depend on the services of their key personnel.
Current and prospective employees of ADC and Andrew may, either
before or after the merger, experience uncertainty about their
future roles with the combined company, which may affect the
performance of such personnel adversely and the ability of each
company to retain and attract key personnel. The loss of the
services of one or more of these key employees or the inability
of ADC, Andrew or the combined company to attract, train, and
retain qualified employees could result in the loss of customers
or otherwise inhibit the ability of ADC Andrew to integrate and
grow the business effectively.
The
merger may result in a loss of customers.
Some customers may seek alternative sources of product
and/or
service after the announcement of the merger due to, among other
reasons, a desire not to do business with the combined company
or perceived concerns that the combined company may not continue
to support and develop certain product lines. Difficulties in
combining operations could also result in the loss of, or
potential disputes or litigation with, customers. Any steps by
management to counter such potential increased customer
attrition may not be effective. Failure by management to retain
customers could result in worse than anticipated financial
performance.
If the
conditions to the merger are not met, the merger may not
occur.
Specified conditions set forth in the merger agreement must be
satisfied or waived to complete the merger. For a more complete
discussion of the conditions to the merger, please see The
Merger Agreement Conditions to Completion of
the Merger. If the conditions are not satisfied or waived,
to the extent permitted by law or the rules or regulations of
Nasdaq, the merger will not occur or will be delayed, and each
of ADC and Andrew may lose some or all of the intended benefits
of the merger. The following conditions, in addition to other
customary closing conditions, must be satisfied or waived, if
permissible, before ADC and Andrew are obligated to complete the
merger:
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|
|
The merger agreement must be adopted by the holders of a
majority of the issued and outstanding shares of Andrew common
stock as of the Andrew record date.
|
|
|
|
The ADC Andrew share issuance must be approved by a majority of
the votes cast in person or by proxy at the ADC special meeting
(provided a quorum is present).
|
|
|
|
The waiting period (and any extension thereof) applicable to the
merger pursuant to the HSR Act, or any other applicable
competition, merger, antitrust or similar law shall have expired
or been terminated.
|
|
|
|
Specified governmental consents and approvals shall have been
obtained and be in full force and effect.
|
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|
|
There must not be any judgment, injunction, decree or order
issued by any court or other governmental entity or any other
statute, law, rule, legal restraint or prohibition which
prohibits, materially restricts, makes illegal or enjoins
consummation of the merger.
|
|
|
|
There must not be any action or proceeding pending by a
governmental entity challenging or seeking to prevent the
consummation of the merger.
|
ADC
and Andrew may waive one or more of the conditions to the merger
without resoliciting stockholder approval for the
merger.
Each of the conditions to ADCs and Andrews
obligations to complete the merger may be waived, in whole or in
part, to the extent permitted by applicable law or Nasdaq rules
or regulations, by agreement of
29
ADC and Andrew if the condition is a condition to both
ADCs and Andrews obligations to complete the merger,
or by the party for which such condition is a condition of its
obligation to complete the merger. The boards of directors of
ADC and Andrew will evaluate the materiality of any such waiver
to determine whether amendment of this joint proxy
statement/prospectus and resolicitation of proxies is necessary.
However, ADC and Andrew generally do not expect any such waiver
to be significant enough to require resolicitation of
shareholders. In the event that any such waiver is not
determined to be significant enough to require resolicitation of
shareholders, the companies will have the discretion to complete
the merger without seeking further shareholder approval. ADC and
Andrew have agreed, however, that neither party shall waive the
condition regarding the receipt of the opinion of its tax
counsel following the adoption of the merger agreement by Andrew
stockholders or, approval of the ADC Andrew share issuance by
ADC shareowners, as the case may be, unless further shareholder
approval is obtained with appropriate disclosure.
Some
directors and executive officers of Andrew have interests that
differ from those of Andrew stockholders in recommending that
Andrew stockholders vote in favor of adoption of the merger
agreement.
Certain executive officers and directors of Andrew have
interests in the merger that are different from and in addition
to the interests of Andrew stockholders generally.
At the effective time of the merger, four current members of
Andrews board of directors will be elected to ADC
Andrews board of directors. After the merger, some of
Andrews executive officers will remain executive officers
of, or consultants to, ADC Andrew or may become employees of ADC
Andrew and may be offered equity-based or other incentives to
remain with the combined company. The merger will cause vesting
of some outstanding equity awards under the Andrew stock plans
in which Andrews executive officers and directors
participate. In addition, the merger will trigger
change-in-control
provisions under agreements Andrew has entered into with its
executive officers, which will entitle them to severance
benefits, payments in lieu of some perquisites, continuation of
some benefit plans or payments in lieu of participation in such
plans, payments to cover some taxes, including some excise
taxes, and payments of legal expenses incurred by executives in
enforcing their agreements. Some of these payments may be made
within 30 days after the completion of the merger without
regard to termination of employment. Upon completion of the
merger, any portion of the balance in a participants
account under Andrews employee retirement benefit
restoration plan that was not previously forfeited or vested
will become fully vested and payable. Each such participant will
be entitled to a lump sum payment of the balance in his or her
plan account as determined in accordance with the terms of the
plan. If the merger is completed prior to the end of the
performance period applicable to performance cash awards granted
under Andrews management incentive program, then all
outstanding awards under the program that were not previously
forfeited or vested will become fully vested and payable upon
completion of the merger and each grantee will be entitled to a
lump sum payment of his or her awards in accordance with the
terms of the plan.
The surviving corporation will indemnify, and provide advance
expenses to, each current and former director and officer of
Andrew and its subsidiaries against all losses in connection
with any proceeding arising out of the fact that such person was
a director or officer of Andrew or its subsidiaries, to the same
extent that such person was indemnified prior to the date of the
merger agreement. For six years after completion of the merger,
ADC Andrew will maintain policies of directors and
officers liability and fiduciary insurance on terms no
less favorable to the insured as those in effect as of the date
of the merger agreement, subject to certain limitations,
covering acts or omissions before the merger. As of
June 15, 2006, Andrews executive officers and
directors and their respective affiliates owned approximately
0.6% of the shares of outstanding Andrew common stock. As of
June 21, 2006, ADCs executive officers and directors
and their respective affiliates did not beneficially own any
shares of Andrew stock.
Such interests may influence directors in making their
recommendation that you vote in favor of adoption of the merger
agreement and may influence officers in supporting the merger.
For more information about these interests, please see
Andrew Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance Interests of Andrew
Directors and Executive Officers in the Merger.
30
The
value of the shares of ADC Andrew common stock that Andrew
stockholders receive in the merger, as well as the percentage of
the outstanding shares of capital stock of ADC Andrew held by
Andrew stockholders following the merger, may decline as a
result of additional acquisitions by ADC Andrew in the
future.
After the merger, ADC Andrew may, as part of its business
strategy, pursue additional acquisitions of companies or
businesses. Any acquisition is subject to inherent risk and ADC
Andrew cannot guarantee that it will be able to negotiate
economically beneficial terms of such acquisition successfully,
complete any acquisition, successfully integrate such business,
retain its key employees
and/or
achieve the anticipated revenue, cost benefits or synergies. In
connection with any potential future acquisition, ADC Andrew may
issue additional shares of ADC Andrew common stock which could
dilute the holdings of holders of ADC Andrew common stock at the
time of such future acquisitions, including former Andrew
stockholders.
The
merger agreement limits ADCs and Andrews ability to
pursue an alternative transaction proposal to the merger, and
requires ADC or Andrew to pay a termination fee if it does so
under certain circumstances.
The merger agreement prohibits ADC and Andrew from soliciting,
initiating, encouraging or facilitating certain alternative
transaction proposals with any third party, subject to
exceptions set forth in the merger agreement. See the section
entitled The Merger
Agreement Covenants No
Solicitation. Further, the merger agreement provides that
ADC or Andrew may be required to pay a termination fee to the
other equal to $75 million in certain circumstances. See
the section entitled The Merger
Agreement Termination Fee for a
discussion of the circumstances in which ADC or Andrew may be
required to pay a termination fee. These provisions limit
ADCs and Andrews ability to pursue offers from third
parties that could result in greater value to shareholders of
ADC or Andrew relative to the terms and conditions of the
merger. ADCs and Andrews obligation to pay the
termination fee may discourage a third party from pursuing a
competing acquisition proposal that could result in greater
value to ADC or Andrew shareholders. In addition, payment of the
termination fee could adversely affect the financial condition
of the party making the payment.
Risks
Related to the ADC Andrew Common Stock
ADCs
stock price is volatile.
Based on the trading history of ADCs common stock and the
nature of the market for publicly traded securities of companies
in the communications industry, ADC believes that some factors
have caused the market price of its common stock to fluctuate
substantially. These factors are likely to cause the market
price of the ADC Andrew common stock issued in the merger to
fluctuate substantially. These fluctuations could occur from
day-to-day
or over a longer period of time. The factors that may cause such
fluctuations include, without limitation:
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Announcements of new products and services by ADC or its
competitors.
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Quarterly fluctuations in ADCs financial results or the
financial results of ADCs competitors or customers.
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Customer contract awards to ADC or its competitors.
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Increased competition with ADCs competitors or among its
customers.
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Consolidation among ADCs competitors, customers or vendors.
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Disputes concerning intellectual property rights.
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The financial health of ADC, ADCs competitors, customers
or vendors.
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Developments in telecommunications regulations.
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General conditions in the communications equipment industry.
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General economic conditions in the U.S. or internationally.
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Rumors or speculation regarding ADCs future business
results and actions.
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31
In addition, stocks of companies in the communications industry
in the past have experienced significant price and volume
fluctuations that are often unrelated to the operating
performance of such companies. This market volatility may
adversely affect the market price of ADCs common stock and
ADC Andrew common stock after the merger.
ADC
has not in the past and does not intend in the foreseeable
future to pay cash dividends on its common stock.
ADC has not in the past and currently does not pay any cash
dividends on its common stock and does not anticipate paying any
cash dividends on its common stock in the foreseeable future.
ADC Andrew intends to retain future earnings, if any, to finance
its operations and for general corporate purposes.
Anti-takeover
provisions in ADCs charter documents, its shareowner
rights plan and Minnesota law could prevent or delay a change in
control of ADC.
Provisions of ADCs articles of incorporation and by-laws,
its shareowner rights plan (also known as a poison
pill) and Minnesota law may discourage, delay or prevent a
merger or acquisition that a shareowner may consider favorable
and may limit the market price for ADCs common stock.
These provisions include the following:
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Advance notice requirements for shareowner proposals.
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Authorization for ADCs Board of Directors to issue
preferred stock without shareowner approval.
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Authorization for ADCs Board of Directors to issue
preferred stock purchase rights upon a third partys
acquisition of 15% or more of its outstanding shares of common
stock.
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Limitations on business combinations with interested shareowners.
|
Some of these provisions may discourage a future acquisition of
ADC even though its shareowners would receive an attractive
value for their shares or a significant number of its
shareowners believe such a proposed transaction would be in
their best interest.
Risks
Associated with ADCs Business
The success of ADCs business is subject to several factors
including, without limitation:
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ADCs ability to operate its business to achieve, maintain
and grow operating profitability.
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Macroeconomic factors that influence the demand for
telecommunications services and the consequent demand for
communications equipment.
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Consolidation among customers, competitors or vendors which
could, among other things, cause disruption in customer
relationships or displacement of ADC as an equipment vendor to
the surviving entity in a customer consolidation.
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ADCs ability to keep pace with rapid technological change
in the communications industry.
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ADCs ability to make the proper strategic choices with
respect to product line acquisitions or divestitures.
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ADCs ability to integrate the operations of any acquired
businesses with its operations.
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Increased competition within the industry and increased pricing
pressure from customers.
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ADCs dependence on relatively few customers for a majority
of sales as well as potential sales growth in market segments
that presently have the greatest growth potential.
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Fluctuations in ADCs operating results from
quarter-to-quarter,
which are influenced by many factors outside of its control,
including variations in demand for particular products in
ADCs portfolio that have varying profit margins.
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32
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The impact of regulatory changes on customers willingness
to make capital expenditures for ADC equipment and services.
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Financial problems, work interruptions in operations or other
difficulties faced by some customers, which can influence future
sales to these customers as well as ADCs ability to
collect amounts due.
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Economic and regulatory conditions both in the United States and
outside of the United States, as over 40% of ADCs sales
come from
non-U.S. jurisdictions.
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ADCs ability to protect intellectual property rights and
defend against infringement claims made by third parties.
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Possible limitations on ADCs ability to raise additional
capital if required, either due to unfavorable market conditions
or lack of investor demand.
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ADCs ability to attract and retain qualified employees in
a competitive environment.
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Potential liabilities that could arise if there are design or
manufacturing defects with respect to any of ADCs products.
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ADCs ability to obtain, and the price of, raw materials
and components, and ADCs dependence on contract
manufacturers to make certain of ADCs products.
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Changes in interest rates, foreign currency exchange rates and
equity securities prices, all of which will impact ADCs
operating results.
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ADCs ability to successfully defend or satisfactorily
settle any pending litigation or litigation that may arise.
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For additional detail regarding the risks related to the
operations of ADCs business, see the section captioned
Risks Related to Our Business in ADCs Annual
Report on
Form 10-K
for the fiscal year ended October 31, 2005 and Quarterly
Reports on
Form 10-Q
for the fiscal quarters ended January 27, 2006 and
April 28, 2006, which are incorporated by reference into
this joint proxy statement/prospectus.
Risks
Associated with Andrews Business
The success of Andrews business is subject to several
factors including, without limitation:
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fluctuations in commodity costs;
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Andrews ability to integrate acquisitions and to realize
the anticipated synergies and cost savings;
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the effects of competitive products and pricing;
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political and economic instability outside the United States may
impact international operations and sales of Andrews
products and services;
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Andrews ability to achieve the cost savings anticipated
from cost reduction programs;
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fluctuations in foreign currency exchange rates;
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the timing of cash payments and receipts
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end user demands for wireless communication services;
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the loss of one or more significant customers; and
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other business factors.
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For additional detail regarding the risks described above, and
for additional risks relating to the operations of Andrews
business, see the section captioned Risk Factors in
Andrews Annual Report on
Form 10-K
for the fiscal year ended September 30, 2005, and
Andrews Quarterly Reports on
Form 10-Q
for the fiscal quarters ended December 31, 2005 and
March 31, 2006, which are incorporated by reference into
this joint proxy statement/prospectus.
33
BUSINESS
OF ADC
ADC is a leading global provider of communications network
infrastructure solutions and services. ADCs products and
services provide connections for communications networks over
copper, fiber, coaxial and wireless media and enable the use of
high-speed Internet, data, video and voice services by
residences, businesses and mobile communications subscribers.
ADCs products include fiber optic, copper and coaxial
based frames, cabinets, cables, connectors, cards and other
physical components essential to enable the delivery of
communications for wireline, wireless, cable, and broadcast
networks by service providers and enterprises. ADCs
products also include network access devices such as
high-bit-rate digital subscriber line and wireless coverage
solutions. ADCs products are primarily used in the
last mile/kilometer portion of networks. These
networks of copper, coaxial cable, fiber lines, wireless
facilities and related equipment link voice, video and data
traffic from the end-user of the communications service to the
serving office of ADCs customer. In addition, ADC provides
professional services relating to the design, equipping and
building of networks. The provision of such services allows ADC
additional opportunities to sell its hardware products, thereby
complementing its hardware business.
ADCs customers include local and long-distance telephone
companies, private enterprises that operate their own networks,
cable television operators, wireless service providers, new
competitive service providers, broadcasters, governments, system
integrators and communications equipment manufacturers and
distributors. ADC offers broadband connectivity systems,
enterprise systems, wireless transport and coverage optimization
systems, business access systems and professional services to
its customers through the following two reportable business
segments:
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Broadband Infrastructure and Access; and
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Professional Services.
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ADCs Broadband Infrastructure and Access business provides
network infrastructure products for wireline, wireless, cable,
broadcast and enterprise network applications. These products
consist of:
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connectivity systems and components that provide the
infrastructure to networks to connect Internet, data, video and
voice services over copper, coaxial and fiber-optic
cables; and
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access systems used in the last mile/kilometer of wireline and
wireless networks to deliver high-speed Internet, data and voice
services.
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ADCs Professional Services business provides integration
services for broadband, multiservice communications over
wireline, wireless, cable and enterprise networks. Professional
services are used to plan, deploy and maintain communications
networks that deliver Internet, data, video and voice services.
34
BUSINESS
OF ANDREW
Andrew, together with its subsidiaries, is engaged in the
design, manufacture, and supply of communications equipment,
services, and systems for global communications infrastructure
markets. Andrews products are primarily based on the
companys core competency, the radio frequency (RF) path.
Andrew has unique technical skills and marketing strengths in
developing products for RF systems. Andrews products are
used in the infrastructure for traditional wireless networks,
third generation (3G) technologies, voice, data, video and
Internet services, as well as applications for microwave and
satellite communications, and other specialized applications.
Andrew operates its business in the following five segments:
Antenna and Cable Products, Base Station Subsystems, Network
Solutions, Wireless Innovations and Satellite Communications.
Antenna and Cable Products include coaxial cables, connectors,
cable assemblies and accessories as well as base station
antennas and terrestrial microwave antennas. Base Station
Subsystems products are integral components of wireless base
stations and include products such as power amplifiers, filters,
duplexers and combiners that are sold individually or as parts
of integrated subsystems. Network Solutions includes software
and equipment to locate wireless Enhanced 911 emergency callers,
as well as equipment and services for testing and optimizing
wireless networks. Wireless Innovations products are used to
extend and enhance the coverage of wireless networks in areas
where signals are difficult to send or receive, and include both
complete systems and individual components. Satellite
Communications products include earth station antennas, high
frequency and radar antennas,
direct-to-home
antennas and very small aperture terminal antennas.
35
THE ADC
SPECIAL MEETING
This joint proxy statement/prospectus is furnished in connection
with the solicitation of proxies from the holders of ADC common
stock by the ADC board of directors for use at the special
meeting of ADC shareowners. The purpose of the special meeting
is for ADC shareowners to consider and vote upon a proposal to
issue shares of ADC Andrew common stock in the merger. A copy of
the merger agreement is attached to this joint proxy
statement/prospectus as Annex A and made part of this joint
proxy statement/prospectus.
This joint proxy statement/prospectus is first being furnished
to ADC shareowners on or about , 2006.
Date,
Time and Place of the Special Meeting
The special meeting of ADC shareowners will be held
on , 2006, at commencing
at local time. We are sending this joint proxy
statement/prospectus to you in connection with the solicitation
of proxies by the ADC board of directors for use at the ADC
special meeting and any adjournments or postponements of the
special meeting.
Matters
to be Considered at the Special Meeting
The matters to be considered at the meeting are:
(1) Proposal No. 1 to approve the issuance of ADC
Andrew common stock in the merger; (2) Proposal No. 2
to adjourn the special meeting to solicit additional proxies for
approval of Proposal No. 1, if necessary; and
(3) transaction of such other business as may properly come
before the special meeting or any adjournments or postponements
of the special meeting.
ADC
Andrew Board of Directors
In connection with the merger, four members of ADCs board
of directors (James C. Castle Ph.D., John E. Rehfeld,
Jean-Pierre Rosso and John D. Wunsch) will resign effective as
of the effective time of the merger. Four members of
Andrews board of directors (Gerald A. Poch, Anne F.
Pollack, Glen O. Toney and Andrea L. Zopp) will be elected and
join eight members of ADCs board of directors (John A.
Blanchard III, John J. Boyle III, Mickey P. Foret, J.
Kevin Gilligan, Lois M. Martin, William R. Spivey, Ph.D.,
Robert E. Switz and Larry W. Wangberg) to form the ADC Andrew
board of directors immediately after the closing of the merger.
By approving ADC Proposal No. 1, and assuming the
merger closes, ADC shareowners will be electing four members of
the Andrew board of directors to fill the vacancies on the ADC
Andrew board created by the resignations of the departing ADC
directors. For further information on the ADC Andrew board of
directors, please see the section entitled Andrew
Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance ADC Andrew Board of
Directors.
Record
Date and Shares Entitled to Vote
Only holders of record of ADC common stock at the close of
business on the ADC record date, , 2006, are
entitled to notice of, and to vote at, the ADC special meeting.
There were approximately holders of record of
ADC common stock at the close of business on the ADC record
date. Because many of such shares are held by brokers and other
institutions on behalf of shareowners, ADC is unable to estimate
the total number of shareowners represented by these record
holders. There were shares of ADC common stock
issued and outstanding at the close of business on the ADC
record date. Each share of ADC common stock entitles the holder
thereof to one vote on each matter submitted for shareowner
approval.
Voting of
Proxies; Revocation of Proxies
The proxy accompanying this joint proxy statement/prospectus is
solicited on behalf of the board of directors of ADC for use at
the ADC special meeting.
All properly executed proxies that are not revoked will be voted
at the ADC special meeting and at any adjournments or
postponements of the special meeting in accordance with the
instructions in the proxy. If a holder of ADC common stock
executes and returns a proxy and does not specify otherwise, the
shares represented by the proxy will be voted
FOR Proposal No. 1 to approve the
issuance of shares of ADC
36
Andrew common stock in the merger and FOR
Proposal No. 2 to adjourn the special meeting to
solicit additional proxies for approval of
Proposal No. 1, if necessary.
An ADC shareowner who has submitted a proxy may revoke it at any
time before it is voted at the ADC special meeting by executing
and returning a proxy bearing a later date, providing proxy
instructions via the telephone or the Internet (your latest
telephone or Internet proxy is counted), filing written notice
of revocation with the Secretary of ADC stating that the proxy
is revoked or attending the special meeting and voting in person.
Vote
Required for Shareowner Approval
Approval of each of Proposal No. 1 and
Proposal No. 2 requires the affirmative vote of the
holders of a majority of the votes cast in person or by proxy at
the special meeting.
Stock
Ownership of Management and Certain Shareowners
As June 21, 2006, directors and executive officers of ADC
and their affiliates owned and were entitled to vote
346,497 shares of ADC common stock, or approximately 0.3%
of the total shares of ADC common stock outstanding on that date.
Quorum;
Abstentions and Broker Non-Votes
The presence, in person or by proxy, at the special meeting of
the holders of a majority of the shares of ADC common stock
outstanding and entitled to vote at the special meeting is
necessary to constitute a quorum at the meeting. Abstentions and
broker non-votes will be counted towards a quorum, but will not
be counted for any purpose in determining whether either
proposal is approved.
Solicitation
of Proxies; Expenses
In addition to solicitation by mail, the directors, officers,
employees and agents of ADC may solicit proxies from ADCs
shareowners in person, by telephone, by electronic mail or other
electronic means or otherwise. ADC will bear the costs of the
solicitation of proxies from its shareowners, including the cost
of printing and mailing this joint proxy statement/prospectus to
ADC shareowners. ADC also has employed Innisfree M&A
Incorporated to solicit proxies on its behalf and will pay them
approximately $100,000, plus expenses, for their services.
Arrangements will also be made with brokerage firms and other
custodians, nominees and fiduciaries who are record holders of
ADC common stock for the forwarding of solicitation materials to
the beneficial owners of ADC common stock. ADC will reimburse
these brokers, custodians, nominees and fiduciaries for the
reasonable
out-of-pocket
expenses they incur in connection with the forwarding of
solicitation materials.
Dissenters
Rights
ADC shareowners do not have dissenters rights under the
Minnesota Business Corporations Act in connection with the
issuance of ADC Andrew common stock in the merger.
ADC Board
Recommendation
The issuance of shares of ADC Andrew common stock in the merger
was unanimously approved by the ADC directors present at the ADC
board meeting called for that purpose, which included all of the
directors except for Jean-Pierre Rosso, who, because of a prior
commitment outside of the country, was unable to attend. The
absence of Mr. Rosso from the ADC board meeting did not
represent a disapproval by him of the merger or a determination
not to recommend that ADC shareowners vote for the ADC Andrew
share issuance. Mr. Rosso had participated in prior ADC
Board discussions regarding the merger and prior to the
May 30 ADC board meeting, Mr. Rosso expressed his
support for the merger and the issuance of ADC Andrew shares in
the merger. Subsequent to May 30 ADC board meeting, after
reviewing the final material terms of the merger, Mr. Rosso
confirmed that he fully supports the ADC Board of
Directors determination to approve and
37
declare advisable the merger and recommend that ADC shareowners
vote to approve the ADC Andrew share issuance.
ADCS BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES
THAT THE ISSUANCE OF SHARES OF ADC ANDREW COMMON STOCK IN
THE MERGER IS ADVISABLE TO, AND IN THE BEST INTERESTS OF, ADC
AND ITS SHAREOWNERS AND HAS APPROVED SUCH ISSUANCE. ADCS
BOARD OF DIRECTORS RECOMMENDS THAT ALL ADC SHAREOWNERS VOTE
FOR PROPOSAL NO. 1.
ADCS BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES
THAT THE PROPOSAL TO ADJOURN THE ADC SPECIAL MEETING, IF
NECESSARY, IF A QUORUM IS PRESENT, TO SOLICIT ADDITIONAL PROXIES
IF THERE ARE NOT SUFFICIENT VOTES IN FAVOR OF
PROPOSAL NO. 1 IS ADVISABLE TO, AND IN THE BEST
INTERESTS OF, ADC AND ITS SHAREOWNERS AND HAS APPROVED AND
ADOPTED THE PROPOSAL. ACCORDINGLY, ADCS BOARD OF DIRECTORS
RECOMMENDS THAT ALL ADC SHAREOWNERS VOTE FOR
PROPOSAL NO. 2.
38
THE
ANDREW SPECIAL MEETING
Date,
Time and Place
These proxy materials are delivered to you in connection with
the solicitation by Andrews board of directors of proxies
to be voted at the Andrew special meeting, which is to be held
at in , Illinois
on , 2006 at , local time. On
or about , 2006, Andrew commenced mailing this
joint proxy statement/prospectus and the enclosed form of proxy
to its stockholders entitled to vote at the meeting. The special
meeting may be adjourned or postponed to another date or place
for proper purposes, including for the purpose of soliciting
additional proxies.
Matters
to be Considered at the Meeting
At the Andrew special meeting, holders of Andrew common stock
will be asked to consider and vote on proposals, as more fully
described in the joint proxy statement/prospectus:
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To consider and vote on Proposal No. 1 to adopt the
merger agreement (adoption of the merger agreement by Andrew
stockholders will constitute approval of all of the transactions
contemplated in the merger agreement);
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To consider and vote on Proposal No. 2 to adjourn the
special meeting to solicit additional proxies for approval of
Proposal No. 1, if necessary; and
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To transact other business as may properly come before the
special meeting or any adjournments or postponements of the
special meeting.
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The proxies may vote, at their discretion, upon such other
business as may properly come before the special meeting or any
adjournment or postponement of the special meeting. At the
present time, Andrew knows of no other matters that will be
presented for consideration at the special meeting.
Record
Date and Shares Entitled to Vote
Only holders of record of Andrew common stock at the close of
business on the Andrew record date, , 2006, are
entitled to notice of, and to vote at, the Andrew special
meeting. There were approximately holders of
record of Andrew common stock at the close of business on the
Andrew record date. Because many of such shares are held by
brokers and other institutions on behalf of stockholders, Andrew
is unable to estimate the total number of stockholders
represented by these record holders. There
were shares of Andrew common stock issued and
outstanding at the close of business on the Andrew record date.
Each share of Andrew common stock entitles the holder thereof to
one vote on each matter submitted for stockholders approval.
Voting of
Proxies; Revocation of Proxies
Andrew stockholders may vote using any of the following methods:
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phone the toll-free number listed on your proxy card and follow
the recorded instructions;
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go to the Internet website listed on your proxy card and follow
the instructions provided;
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complete, sign and mail your proxy card in the postage-paid
envelope; or
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attend the special meeting and vote in person.
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Andrew stockholders may revoke their proxy at any time prior to
its exercise by:
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giving written notice of revocation to the Secretary of Andrew;
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appearing and voting in person at the Andrew special
meeting; or
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properly completing and executing a later dated proxy and
delivering it to the Secretary of Andrew at or before the Andrew
special meeting.
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Your presence, without voting at the meeting, will not
automatically revoke your proxy, and any revocation during the
meeting will not affect votes previously taken.
Vote
Required for Stockholder Approval
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The affirmative vote in person or by proxy of the holders of at
least a majority of the issued and outstanding shares of Andrew
common stock is required to adopt Proposal No. 1.
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Abstentions will have the same effect as votes cast against the
adoption of Proposal No. 1.
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The failure of a stockholder to vote in person or by proxy will
also have the effect of a vote against Proposal No. 1.
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The affirmative vote in person or by proxy of holders of a
majority of the votes cast at the special meeting is required to
adopt Proposal No. 2.
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Stock
Ownership of Management and Certain Stockholders
As of June 15, 2006, directors and executive officers of
Andrew and their affiliates owned and were entitled to vote
881,714 shares of Andrew common stock, or approximately
0.6% of the total shares of Andrew common stock outstanding on
that date.
Quorum;
Abstentions and Broker Non-Votes
The presence of the holders of a majority of the shares entitled
to vote at the Andrew special meeting either in person or by
proxy constitutes a quorum. Therefore, you will be considered
part of the quorum if you return a signed and dated proxy card,
if you vote by telephone or Internet, or if you attend the
meeting. Abstentions are counted as shares present
at the meeting for purposes of determining whether a quorum
exists.
Proxies submitted by brokers that do not indicate a vote for the
merger because the brokers do not have discretionary voting
authority and have not received instructions from you as to how
to vote on the proposals (broker non-votes) are
considered shares present for purposes of
determining whether a quorum exists. Broker non-votes will have
the same effect as a vote against the adoption of merger
agreement.
Solicitation
of Proxies; Expenses
The accompanying proxy is being solicited on behalf of
Andrews board of directors. Andrew will pay all of the
costs of preparing, mailing and soliciting the proxies and
materials used in this solicitation. Andrew will ask banks,
brokers and other nominees and fiduciaries to forward the proxy
materials to the beneficial owners of Andrew common stock and to
obtain the authority to execute proxies. Andrew will reimburse
them for their reasonable expenses.
In addition to mailing proxy materials, Andrews directors,
officers and employees may solicit proxies in person, by
telephone or otherwise. Andrew also has employed MacKenzie
Partners, Inc. to solicit proxies on its behalf and will pay
them approximately $75,000, plus reimbursement or
out-of-pocket
expenses, for their services.
Appraisal
Rights
Holders of Andrew common stock do not have appraisal rights
under the Delaware General Corporation Law in connection with
the merger.
Andrew
Board Recommendation
The merger agreement was unanimously approved by the directors
present at the meeting called for that purpose, which included
all of the directors except for Gerald A. Poch, who was only
able to attend the first hour of the meeting due to a pressing
prior commitment. The absence of Mr. Poch from the meeting
did not
40
represent a disapproval by him of the merger agreement or a
determination not to recommend that Andrew stockholders vote for
the adoption of the merger agreement. Mr. Poch has
subsequently stated that he fully supports the board of
directors determination to approve and declare advisable
the merger agreement and recommend that Andrew stockholders vote
for the adoption of the merger agreement. Andrews board of
directors recommends that Andrew stockholders vote to approve
the adoption of the merger agreement.
ANDREWS BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES
THAT THE ADOPTION OF THE MERGER AGREEMENT IS ADVISABLE TO, AND
IN THE BEST INTERESTS OF, ANDREW AND ITS STOCKHOLDERS AND HAS
APPROVED THE ADOPTION OF THE MERGER AGREEMENT. ANDREWS
BOARD OF DIRECTORS RECOMMENDS THAT ALL ANDREW STOCKHOLDERS VOTE
FOR PROPOSAL NO. 1.
ANDREWS BOARD OF DIRECTORS HAS DETERMINED AND BELIEVES
THAT THE PROPOSAL TO ADJOURN THE ANDREW SPECIAL MEETING, IF
NECESSARY, IF A QUORUM IS PRESENT, TO SOLICIT ADDITIONAL PROXIES
IF THERE ARE NOT SUFFICIENT VOTES IN FAVOR OF
PROPOSAL NO. 1 IS ADVISABLE TO, AND IN THE BEST
INTERESTS OF, ANDREW AND ITS STOCKHOLDERS AND HAS APPROVED AND
ADOPTED THE PROPOSAL. ACCORDINGLY, ANDREWS BOARD OF
DIRECTORS RECOMMENDS THAT ALL ANDREW STOCKHOLDERS VOTE
FOR PROPOSAL NO. 2.
41
ANDREW
PROPOSAL NO. 1 AND ADC
PROPOSAL NO. 1 THE MERGER
AND THE ADC ANDREW SHARE ISSUANCE
General
Description of the Merger
At the effective time, Hazeltine Merger Sub, Inc. will be merged
with and into Andrew. Andrew will be the surviving corporation
in the merger and will continue as a wholly owned subsidiary of
ADC. In connection with the merger, ADC will change its name to
ADC Andrew, Inc. In the merger, each share of Andrew
common stock outstanding at the effective time will
automatically be converted into the right to receive
0.57 shares of ADC Andrew common stock. Each Andrew
stockholder who would otherwise be entitled to receive a
fraction of a share of ADC Andrew common stock (after
aggregating all fractional shares to be received by such
stockholder) will instead be paid in cash for such fractional
share.
Based on the number of shares of ADC common stock and Andrew
common stock outstanding as of June 28, 2006, up to
106,901,664 shares of ADC Andrew common stock will be issuable
pursuant to the merger agreement, representing approximately 44%
of the total ADC Andrew common stock to be outstanding after
such issuance. This percentage includes as outstanding any
Andrew restricted stock units that will vest as a result of the
merger and assumes that no Andrew or ADC stock options or
warrants are exercised and no convertible notes are converted
after the ADC record date and prior to the effective time of the
merger.
In connection with the merger, four members of ADCs board
of directors (James C. Castle, Ph.D., John E. Rehfeld,
Jean-Pierre Rosso and John D. Wunsch) will resign effective as
of the effective time of the merger. Four members of
Andrews board of directors (Gerald A. Poch, Anne F.
Pollack, Glen O. Toney and Andrea L. Zopp) will be elected and
join eight members of ADCs board of directors (John A.
Blanchard III, John J. Boyle III, Mickey P. Foret, J.
Kevin Gilligan, Lois M. Martin, William R. Spivey, Ph.D.,
Robert E. Switz and Larry W. Wangberg) to form the ADC Andrew
board of directors immediately after the closing of the merger.
For further information on the ADC Andrew board of directors,
please see the section entitled ADC Andrew
Board of Directors.
Background
of the Merger
Since the late 1990s, members of senior management of ADC
and Andrew have had contacts and discussions with each other
from time to time regarding business conditions, including
trends in their respective markets and the possibility of a
strategic combination or alliance between ADC and Andrew.
Starting in early 2003, ADCs management has made periodic
presentations to its board of directors about the potential
opportunity to obtain scale in the wireless infrastructure
market through a significant transaction. Andrew was identified
at a number of ADC board strategy sessions as a logical
candidate for expansion into that market.
During this same time period, Andrews board of directors
has regularly reviewed Andrews strategic objectives and
the means of achieving those objectives, including potential
strategic initiatives and various business combinations. In
particular, Andrews board has considered the possibility
of combining its position in the wireless infrastructure market
with a company that has a leading position in wireline
connectivity solutions. ADC was identified by Andrews
board as a candidate for expansion into the wireline market.
On March 11, 2004, Robert E. Switz, Chief Executive Officer
of ADC, and Ralph E. Faison, Chief Executive Officer of Andrew,
met in Chicago at Mr. Faisons suggestion. Although
Messrs. Switz and Faison concluded that a business
combination between Andrew and ADC appeared to have a strong
strategic rationale, Mr. Switz indicated that the timing
was not right for ADC. Messrs. Switz and Faison agreed that
they should continue to communicate in the future. Shortly
thereafter, ADC announced its acquisition of the KRONE Group of
businesses.
During the time period of periodic exploratory discussions, each
company remained focused on execution of its own business and
other strategic priorities and no further action was taken with
regard to a possible ADC/Andrew business combination until
January 2005. On January 7, 2005, Messrs. Switz and
Faison recommenced their general discussions of ADCs and
Andrews businesses and the possibility that a strategic
42
combination would permit the parties to achieve cost
efficiencies and other business synergies. Messrs. Switz
and Faison agreed that senior executives of the respective
companies should further analyze the possible cost efficiencies
and other business synergies that might be achieved by a
strategic business combination between ADC and Andrew. On
January 20, 2005, in order to facilitate these discussions,
ADC and Andrew executed a mutual confidentiality agreement and
parallel standstill agreements.
On January 20, 2005, Gokul V. Hemmady, the Vice President
and Chief Financial Officer of ADC, met with Marty R. Kittrell,
the Chief Financial Officer of Andrew, and other senior Andrew
executives at Andrews corporate headquarters, to discuss
possible synergies that might be achieved in a business
combination of the companies. On January 31, 2005 and
February 1, 2005, representatives of both companies met at
ADCs corporate headquarters, to continue their discussions
regarding possible synergies.
On February 6, 2005, Andrew engaged Citigroup Global
Markets Inc., which we refer to as Citigroup, as its financial
advisor in connection with a possible strategic business
combination with ADC.
On March 11, 2005, Messrs. Switz and Faison further
discussed the possibility of a strategic business combination
transaction between ADC and Andrew. They acknowledged that the
strategic rationale for combining ADCs wireline and
Andrews wireless businesses was compelling but determined
to defer further discussions, at least for the time being.
During its regularly scheduled July 2005 board meeting, ADC
again identified Andrew as one of the leading wireless
infrastructure companies which may be available for a potential
strategic business combination. Following that board meeting,
Mr. Switz telephoned Mr. Faison to reopen exploratory
discussions about a possible strategic business combination.
In mid-November 2005, ADC and Andrew, through their respective
financial advisors, Credit Suisse Securities (USA) LLC, which we
refer to as Credit Suisse, and Citigroup, exchanged updated
information relating to a possible business combination
transaction between the companies.
On November 29, 2005, Messrs. Hemmady and Kittrell,
and representatives of Credit Suisse met in Phoenix, Arizona
while attending an investor conference to explore further the
financial and business considerations involved with a potential
strategic combination between the two companies. Following that
meeting, and during the month of December 2005, each party met
with their respective advisors to consider further the
possibility of such a combination, explore various options and
continue to conduct their own diligence on the other
partys publicly available information.
ADC senior management briefed the ADC board of directors at its
regularly scheduled meeting on December 13, 2005, and
obtained its approval to continue exploration of a strategic
business combination with Andrew. Thereafter, on
December 22, 2005, Mr. Switz called Mr. Faison to
suggest that there may be a basis on which the parties could
proceed with a strategic business combination. On
December 26, 2005, Mr. Switz delivered to
Mr. Faison a non-binding, preliminary term sheet. The term
sheet contemplated, among other things, a
stock-for-stock
merger in which each outstanding share of Andrew common stock
would be exchanged for between 0.50 and 0.53 shares of ADC
common stock, subject to, among other things, the parties being
able to conduct further confirmatory diligence and the
negotiation and execution of a mutually satisfactory definitive
merger agreement.
On January 3, 2006, Andrews board of directors held a
telephonic meeting to consider the proposal made by
Mr. Switz. Andrews board of directors concluded that
the strategic rationale for the transaction was compelling, but
determined that the proposal by Mr. Switz did not provide
adequate value to Andrew shareholders and should be rejected.
Andrews financial advisors subsequently informed
ADCs financial advisors of that decision.
On January 23, 2006, ADC formally engaged Credit Suisse to
act as its financial advisor in connection with the possible
transaction with Andrew.
At its regular meeting on March 7, 2006, the ADC board of
directors discussed with senior management the possibility of a
strategic business combination between ADC and Andrew. At that
time, the ADC board indicated its support for continued
exploratory discussions between the senior executive of the two
companies.
43
Thereafter, in March 2006, representatives of Credit Suisse and
Citigroup had several discussions concerning the possibility of
a strategic combination. On March 15, 2006, Mr. Switz
contacted Mr. Faison to suggest a meeting at an upcoming
trade show to reopen discussions.
On April 6, 2006, while attending an industry trade show in
Las Vegas, Nevada, Messrs. Switz and Faison, and
representatives of Credit Suisse and Citigroup, met to discuss
the possibility of moving ahead with a strategic business
combination between ADC and Andrew. At that time, Mr. Switz
offered to increase the proposed exchange ratio to
0.57 shares of ADC common stock for each outstanding share
of Andrew common stock. Mr. Faison stated that he would be
willing to discuss that proposal with the Andrew board of
directors.
On April 10, 2006, Andrews board of directors held a
special meeting during which Mr. Faison provided an update
on his recent discussions with Mr. Switz.
On April 13, 2006, Andrews board of directors held a
special meeting to discuss the proposal that had been received
from ADC. Representatives of Andrews management, Citigroup
and Mayer, Brown, Rowe & Maw LLP, which we refer to as
Mayer Brown, counsel to Andrew, were also present at that
meeting. Citigroup made a presentation to Andrews board of
directors at that time regarding the ADC proposal. At that
meeting, Andrews board of directors authorized
Andrews management to execute a confidentiality agreement
with ADC, to engage in negotiations with ADC to seek
improvements in the terms of its proposal and to conduct further
due diligence regarding the possible transaction. Citigroup
thereafter communicated the results of the Andrew board meeting
to Credit Suisse.
In mid-April 2006, representatives of Credit Suisse delivered to
representatives of Citigroup a proposed schedule of and agenda
for due diligence meetings, an accompanying form of mutual due
diligence request list, and a proposed transaction timetable. In
addition, representatives of Credit Suisse delivered a proposed
form of mutual confidentiality agreement.
After further discussion between the parties respective
financial advisors in
mid-to-late
April 2006, the parties agreed to conduct two days of high level
management meetings offsite for the purpose of furthering their
respective diligence efforts and determining if there were
sufficient business and cultural synergies between the companies
and their respective management teams to warrant further
investments of time and effort by each party. The parties agreed
on the terms, dates, participants and subject matter to be
covered at the management diligence meetings. The parties, their
outside legal advisors and representatives of Credit Suisse and
of Citigroup agreed to meet on May 1 and May 2, 2006,
at a hotel near Chicagos OHare airport. Each party
also established secure electronic data rooms in late April and
early May for use by the other party and their advisors.
Prior to the May 1-2 meetings, the parties instructed their
legal counsel to finalize the terms of the form of
confidentiality agreement. The parties entered into the
confidentiality agreement and mutual forms of standstill
agreements, all as of May 1, 2006. They then proceeded to
conduct a series of parallel meetings among the senior
management teams and outside advisors. In addition to general
overview management presentations, the parties conducted
separate financial, intellectual property, human resources and
legal due diligence discussions during these sessions. Counsel
to ADC, Dorsey & Whitney LLP, which we refer to as
Dorsey & Whitney, and counsel to Andrew, Mayer Brown,
were present during the legal due diligence sessions.
In the days following those meetings, senior executives of each
party and their financial advisors confirmed to each other that
the parties believed that there was enough merit in a potential
strategic business combination coming out of those meetings that
the parties should continue their mutual diligence efforts and
begin negotiations with respect to a definitive merger agreement.
On May 5, 2006, the ADC board of directors held a special
meeting to review and discuss the current status of discussions
with Andrew, the strategic rationale for the proposed
transaction, preliminary financial analysis and preliminary due
diligence results. At the conclusion of the meeting, the ADC
board of directors supported continuation of the process of due
diligence and negotiations around the potential strategic
business combination.
44
On May 12, 2006, ADC retained Dresdner Kleinwort
Wasserstein Securities LLC, as a financial advisor to render an
opinion to the ADC board of directors with respect to the
fairness, from a financial point of view, of the consideration
to be paid by ADC to Andrews stockholders in the proposed
transaction.
On May 12, 2006, Andrews board of directors held a
regularly scheduled board meeting at which representatives of
Andrews management and Citigroup participated. The board
of directors was updated by management and Citigroup regarding
the ADC proposal, Andrews due diligence investigation of
ADC and the results of the negotiations with ADC to date. At
that meeting, Andrews board of directors authorized
Andrews management to continue negotiations with ADC
regarding the proposed business combination transaction.
On May 12, 2006, counsel to ADC delivered a draft merger
agreement to counsel to Andrew. On May 17, 2006, counsel to
Andrew delivered a revised draft of the agreement, containing
the changes requested by Andrew to the initial draft. On
May 19, 2006, the general counsel and other in-house
attorneys for each company, and representatives of
Dorsey & Whitney and Mayer Brown, met at
Dorsey & Whitneys Minneapolis offices to
negotiate the terms of the merger agreement. Several significant
issues remained to be agreed between the parties. Following such
negotiations, ADCs legal team revised and redistributed
the merger agreement on May 22, 2006.
On May 16, 2006, ADC and Andrew entered into a mutual
exclusivity agreement, to expire on May 31, 2006. During
that period of time, each party agreed to negotiate in good
faith with the other party with respect to a definitive merger
agreement, and not to discuss or otherwise solicit any other
offers from other parties, subject to the ability of each party
to enter into any agreement, discussions or negotiations with
any third party regarding an unsolicited offer that a
partys board of directors determined may lead to a
proposal superior to the proposed merger.
On May 18, 2006, the representatives of Andrew contacted
Merrill Lynch, Pierce, Fenner & Smith Incorporated to
discuss the potential engagement of Merrill Lynch for purposes
of rendering an opinion in connection with the proposed merger
with ADC. On May 24, 2006, Andrew formally engaged Merrill
Lynch solely to render an opinion to Andrews board of
directors regarding the fairness, from a financial point of
view, of the exchange ratio to Andrews stockholders in the
proposed merger with ADC.
On May 22, 2006, members of ADCs senior management
met with the finance committee of the board of directors of ADC
to update that committee on the status of negotiations, due
diligence, financial modeling and other issues with respect to
the proposed strategic business combination. The following day,
ADCs management team, along with representatives of Credit
Suisse and Dorsey & Whitney, attended the regularly
scheduled meeting of the ADC board of directors for the purpose
of updating the board with respect to the proposed strategic
business combination and seeking its approval to continue
negotiations. Management and representatives of Credit Suisse
and Dorsey & Whitney discussed with the board the
status of due diligence, transaction negotiations, outstanding
material issues in the merger agreement, proposed preliminary
integration plans and other considerations related to the
potential strategic business combination with Andrew. After
consideration of the information discussed, the board of
directors indicated its support for senior management to
continue and complete negotiations, with the understanding that
management would return to the Board for final approval once
such negotiations and other related matters had been completed
and prior to entering into any merger agreement with Andrew.
From May 22, 2006, through the early morning hours of
May 31, 2006, senior management of ADC and Andrew, their
respective legal advisors and representatives of Credit Suisse
and Citigroup held numerous conversations and exchanged revised
drafts of the merger agreement and negotiated various terms of
the merger agreement, including, among other things, the
conditions to each partys obligations to effect the
merger, the amount of the termination fees, when a termination
fee would be payable by either ADC or Andrew and whether and
under what circumstances either company could terminate the
merger agreement to accept a superior proposal. Also during that
time, members of ADCs senior management met individually
with certain members of Andrews senior management to
discuss post-closing employment arrangements with the combined
company. For additional information, see Andrew
Proposal No. 1 and ADC
Proposal No. 1
45
The Merger and The ADC Andrew Share
Issuance Interests of Andrew Directors and
Executive Officers in the Merger.
On May 25, 2006, Andrews board of directors held a
special meeting. Representatives of Citigroup and Merrill Lynch
reviewed with Andrews board of directors their respective
financial analyses of the proposed business combination with
ADC. In addition, representatives of Andrews management
and PriceWaterhouseCoopers LLP reported on their due diligence
findings regarding ADC. Representatives of Mayer Brown reviewed
certain terms of the draft merger agreement with Andrews
board of directors. Senior management of Andrew and
representatives of Mayer Brown also informed Andrews board
of directors of the status of negotiations and the material
issues relating to the merger agreement, including, among
others, the conditions to each partys obligations to
effect the merger and ADCs insistence that each party be
required to hold a shareholders meeting to consider the adoption
of the merger agreement or the issuance of common stock in the
merger, as appropriate, even if the board of directors of either
party withdraws or changes its recommendation regarding the
merger.
On May 30, 2006, Andrews board of directors held a
special meeting at which representatives of Andrews
management and representatives of Citigroup, Merrill Lynch, and
Mayer Brown were present. At this meeting, the board of
directors reviewed the terms of the merger agreement and the
status of final negotiations with ADC. Representatives of
Merrill Lynch reviewed its financial analyses and delivered to
Andrews board of directors Merrill Lynchs oral
opinion, which opinion was subsequently confirmed in writing, to
the effect that, as of May 30, 2006 and based upon the
assumptions made, matters considered and limits of review set
forth in its written opinion, the exchange ratio pursuant to the
merger of 0.57 was fair, from a financial point of view, to the
holders of Andrew common stock. For further information
regarding this opinion, see ADC Proposal No. 1
and Andrew Proposal No. 1 The Merger
and The ADC Andrew Share Issuance Opinion of
Andrews Financial Advisor. Following further
discussions and deliberations, Andrews board of directors,
by a unanimous vote of those directors present, approved and
declared advisable the merger agreement and the transactions
that it contemplates and resolved to recommend that Andrew
stockholders approve and adopt the merger agreement and the
transactions that it contemplates. One Andrew director was only
present for a portion of this board meeting but subsequently
stated that he fully supports Andrews board of
directors actions in approving the merger agreement.
On May 30, 2006, ADCs board of directors held a
special meeting at which members of ADCs senior management
and representatives of Credit Suisse, DrKW and Dorsey &
Whitney were present. At this meeting, the board of directors
reviewed the terms of the merger agreement and reviewed its
legal duties with its legal counsel. Representatives of DrKW
reviewed its financial analyses and rendered to ADCs board
of directors its oral opinion as of May 30, 2006,
subsequently confirmed in writing and based upon and subject to
the matters stated in its opinion, as to the fairness, from a
financial point of view, of the 0.57 exchange ratio pursuant to
the merger agreement to ADC. For further information regarding
this opinion, see Andrew Proposal No. 1 and ADC
Proposal No. 1 The Merger and The ADC
Andrew Share Issuance Opinion of ADCs
Financial Advisor. Following further discussions and
deliberations, ADCs board of directors, by a unanimous
vote of those directors present, approved and declared advisable
the merger agreement and the transactions that it contemplates
and resolved to recommend that ADC shareowners vote for the
approval of the issuance of shares of ADC common stock
contemplated by the merger agreement. One ADC director was
unable to be present for this board meeting, but had
participated in prior ADC board discussions regarding the
merger, indicated his support for the merger prior to the
May 30 meeting and has subsequently stated that he fully
supports ADCs board of directors actions in
approving the merger agreement.
The merger agreement was entered into in the early morning hours
of May 31, 2006. Later in the morning of May 31, 2006,
prior to the commencement of trading, ADC and Andrew issued a
joint press release announcing the execution of the merger
agreement.
46
Reasons
for the Merger
ADCs
Reasons for the Merger
The following discussion of ADCs reasons for the merger
contains a number of forward-looking statements that reflect the
current views of ADC with respect to future events that may have
an effect on its future financial performance. Forward-looking
statements are subject to risks and uncertainties. Actual
results and outcomes may differ materially from the results and
outcomes discussed in the forward-looking statements. Cautionary
statements that identify important factors that could cause or
contribute to differences in results and outcomes include those
discussed in Forward-Looking Information and
Risk Factors.
In determining whether to approve the merger agreement,
ADCs board of directors consulted with ADCs
management, legal advisors, tax advisors and accountants and was
advised by Credit Suisse, ADCs financial advisor, and
DrKW, which delivered to the board its opinion regarding the
exchange ratio. ADCs board of directors considered a
variety of factors that might impact the long-term, as well as
short-term, interests of ADC and its shareowners. As part of its
deliberations, ADCs board of directors took into
consideration the historical, current and projected financial
condition, results of operations, stock performance,
capitalization and operating, strategic and financial risks of
ADC and Andrew, considered separately for each entity and on a
combined basis.
In considering the merger and strategic alternatives to the
merger, the ADC board of directors considered the evolving state
of the communications marketplace. The wireline and wireless
convergence of communications markets, networks and technologies
is driving broad structural changes across the communications
industry. End users increasingly want their use of
communications services to be completely integrated via
broadband connections across all their wireline and wireless
points of connections to networks. For instance, end users want
to be able to access any voice, Internet/data, and video content
from anywhere at anytime. This demand for everywhere broadband
content has been a significant factor in the recent
consolidation of service providers, such as the combinations of
AT&T/SBC/BellSouth/Cingular, Sprint and Nextel, and Verizon
and MCI. In this converged marketplace, service providers are
larger and offer a wider suite of products and services to their
customers. Vendors of communications equipment have responded to
the consolidation of service providers by also consolidating in
order to have sufficient scale, product breadth and geographic
reach to adequately meet the needs of their larger customers.
This consolidation of equipment vendors is already well underway
with the announcement of business combinations such as Cisco and
Scientific Atlanta, Alcatel and Lucent, Ericsson and Marconi,
and the network businesses of Nokia and Siemens.
In light of the convergence trend discussed above, ADCs
board of directors considered the following factors in reaching
its conclusion to approve the merger and to recommend that ADC
shareowners approve the issuance of shares of ADC Andrew common
stock in the merger, all of which it viewed as generally
supporting its decision to approve the business combination with
Andrew:
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The opportunity in a converging marketplace to combine
ADCs leading wireline connectivity solutions with
Andrews leading wireless infrastructure solutions to
create a global leader in communications network infrastructure
products with greater customer and product diversity as well as
greater financial resources than could have been achieved by ADC
alone.
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The scale of the combined company will have annual sales of
approximately $3.3 billion and should therefore have greater
financial, operational and technical strengths and capabilities
so as to be better positioned to achieve growth and maintain
relevance with large customers who also are consolidating in a
converged marketplace.
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The potential of the combined company to offer both a broader
set of products to meet a wider set of product needs from
customers who operate multiple types of networks in a converged
marketplace as well as the unique ability of the combined
company to meet the needs of wireless network providers for
wireline connections and the needs of wireline providers and
enterprise customers for wireless solutions.
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The potential trend of service providers to source network
infrastructure products from original equipment manufacturers
and the potential to utilize Andrews relationships with
original equipment manufacturers to whom Andrew already sells a
significant amount of product.
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The opportunity to use the sales channels of each company to
cross sell a broader set of products that will be offered by the
combined company.
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The opportunity created by the enhanced geographic reach of the
combined company as well as a specific opportunity to take
advantage of significant operations Andrew has in emerging,
lower-cost markets such as China, the Czech Republic and India.
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The fact that the merger is expected to result in cost synergies
beginning in the first year after consummation of the merger
with preliminary estimated annual pre-tax cost synergies
beginning in the third year after consummation of the merger of
at least $70-80 million, with potential revenue synergies
presenting additional potential upside.
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The fact that the merger is expected to be non-dilutive to the
combined companys earnings per share in the first year and
accretive thereafter, excluding purchase accounting adjustments
and other acquisition-related expenses.
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The ability of the management teams of both ADC and Andrew to
provide management continuity to support the integration of the
two companies and the experienced senior management team of the
combined company resulting from the merger.
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The boards and managements assessment that the
merger and Andrews operating strategy are consistent with
ADCs long-term strategic objectives to be a global leader
in communications network infrastructure.
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Historical and current information about each of ADC and Andrew
and their respective businesses, prospects, financial
performance and condition, operations, technology, management
and competitive position, before and after giving effect to the
merger and the mergers potential effect on stockholder
value, including public reports filed with the SEC, analyst
estimates, market data and managements knowledge of the
telecommunications industry.
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The opinion of DrKW, ADCs financial advisor, that, as of
May 30, 2006 and based on and subject to the factors and
assumptions set forth in its written opinion, the exchange ratio
of 0.57 shares of ADC Andrew common stock to be issued in
exchange for each share of Andrew common stock pursuant to the
merger agreement was fair to ADC from a financial point of view,
and the related financial analyses and presentations.
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The results of the due diligence review of Andrews
businesses and operations by ADCs management, legal
advisors and financial advisors.
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The terms and conditions of the merger agreement, including the
following related factors:
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the determination that an exchange ratio that is fixed and not
subject to adjustment is appropriate to reflect the strategic
purpose of the merger and consistent with market practice for a
merger of this type and that a fixed exchange ratio fairly
captures the respective ownership interests of the ADC and
Andrew shareholders in the combined company based on valuations
of ADC and Andrew at the time of the boards approval of
the merger agreement and avoids fluctuations caused by near-term
market volatility;
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the reciprocal requirement that the merger agreement be
submitted to a vote of the stockholders of Andrew and that the
issuance of shares of ADC Andrew common stock in the merger be
submitted to a vote of the shareowners of ADC;
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the fact that the merger agreement is not subject to termination
solely as a result of any change in the trading price of either
ADCs or Andrews stock between signing of the merger
agreement and consummation of the merger;
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the nature of the conditions to Andrews obligation to
consummate the merger and the limited risk of non-satisfaction
of such conditions;
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the no-solicitation provisions governing Andrews ability
to engage in negotiations with, provide any confidential
information or data to, and otherwise have discussions with, any
person relating to an alternative acquisition proposal;
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the limited ability of the parties to terminate the merger
agreement; and
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the possible effects of the provisions regarding termination
fees.
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The likelihood that the merger will be consummated on a timely
basis, including the likelihood that the merger will receive all
necessary regulatory antitrust approvals.
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The likelihood of retaining key Andrew employees to help manage
the combined entity.
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ADCs board of directors also considered the potential
risks of the merger, including the following:
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The risks, challenges and costs inherent in combining the
operations of two major telecommunications equipment providers
and the substantial expenses to be incurred in connection with
the merger, including the possibility that delays or
difficulties in completing the integration could adversely
affect the combined companys operating results and
preclude the achievement of some benefits anticipated from the
merger.
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The possible volatility, at least in the short term, of the
trading price of ADCs common stock resulting from the
merger announcement.
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The possible effects of increasing commodities prices, including
the price of copper, and raw materials costs on operating
margins.
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The challenge posed by integrating different operating models
and the potential for incompatibility of different business
cultures.
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The possible loss of key management, technical or other
personnel of either of the combining companies as a result of
the management and other changes that will be implemented in
integrating the businesses.
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The risk of diverting managements attention from other
strategic priorities to implement merger integration efforts.
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The negative impact of any customer reductions or delays in
purchase commitments after the announcement of the merger.
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The risk that regulators would require the satisfaction of
certain regulatory conditions that may have the effect of
imposing additional costs on ADC or otherwise reducing the
benefits to ADC if the merger is consummated.
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The potential loss of one or more large customers or partners of
either company as a result of any such customers or
partners unwillingness to do business with the combined
company.
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The possibility that the reactions to the combination of the two
businesses by existing and potential competitors could adversely
impact the competitive environment in which the companies
operate.
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The risk that the merger might not be consummated in a timely
manner or at all.
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The risk to ADCs business, sales, operations and financial
results in the event that the merger is not consummated.
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The risk that the anticipated benefits of product integration
and interoperability and cost savings will not be realized.
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The fact that the merger agreement contains contractual
restrictions on the conduct of ADCs business prior to
completion of the merger.
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Various other applicable risks associated with the combined
company and the merger, including those described in the section
of this joint proxy statement/prospectus entitled Risk
Factors.
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49
The foregoing information and factors considered by ADCs
board of directors are not intended to be exhaustive but are
believed to include all of the material factors considered by
ADCs board of directors. In view of the wide variety of
factors considered in connection with its evaluation of the
merger and the complexity of these matters, the ADC board of
directors did not find it useful, and did not attempt, to
quantify, rank or otherwise assign relative weights to these
factors. In considering the factors described, individual
members of the ADC board of directors may have given different
weight to different factors. The ADC board of directors
conducted an overall analysis of the factors described,
including thorough discussions with, and questioning of,
ADCs management and ADCs legal and financial
advisors, and considered the factors overall to be favorable to,
and to support, its determination.
Andrews
Reasons for the Merger
The following discussion of Andrews reasons for the merger
contains a number of forward-looking statements that reflect the
current views of Andrew with respect to future events that may
have an effect on its future financial performance.
Forward-looking statements are subject to risks and
uncertainties. Actual results and outcomes may differ materially
from the results and outcomes discussed in the forward-looking
statements. Cautionary statements that identify important
factors that could cause or contribute to differences in results
and outcomes include those discussed in Forward-Looking
Information and Risk Factors.
In determining whether to approve the merger agreement,
Andrews board of directors considered a variety of factors
that might impact the long-term, as well as short-term,
interests of Andrew and its stockholders, including whether
these interests may be best served by the continued independence
of Andrew. As part of its deliberations, Andrews board of
directors took into consideration the historical, current and
projected financial condition, results of operations, stock
performance, capitalization and operating, strategic and
financial risks of Andrew and ADC, considered separately for
each entity and on a combined basis.
In making the determination described above, Andrews board
of directors consulted with Andrews management, legal
advisors, tax advisors and accountants and was advised by
Citigroup, Andrews financial advisor, and Merrill Lynch,
which delivered to the board its opinion regarding the exchange
ratio. Andrews board of directors considered a number of
factors, including, among other things, the following principal
positive factors (the order does not reflect relative
significance):
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the combined company is expected to be a leading wireline and
wireless network connectivity company with greater customer,
industry, product diversity and increased financial resources
than could have been achieved alone;
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the combined company will be significantly larger than Andrew,
with combined annual sales of approximately $3.3 billion,
and should have greater financial, operational and technical
strengths and capabilities, which should enable the combined
company to consider and more effectively pursue additional
opportunities for growth;
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the recent consolidation of service providers, such as AT&T
and SBC, AT&T and Bell South, Sprint and Nextel, and Verizon
and MCI, and other customers of Andrew. As a result of this
consolidation, service providers are now larger and offer a
wider suite of products and services to their customers, and
customers are moving toward a single source for wireline and
wireless network products, including next-generation wireless,
broadband, video, data and voice services. Vendors of
communications equipment have also been consolidating in order
to have sufficient scale, product breadth and geographic reach
to adequately meet the needs of their larger customers, and the
Andrew board believes that the merger will position the combined
company to meet these demands;
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the financial and operating strength of ADC, including its
leading position in wireline connectivity solutions combined
with Andrews leading position in wireless solutions is
expected to enable the combined company to realize significant
growth through cross-selling and enhanced geographic reach;
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the fact that Andrews board of directors concluded that
the merger with ADC would likely yield greater benefits to
Andrews stockholders than the other potential strategic
and financial alternatives available to Andrew;
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the assessment by Andrews board of directors of the value
of the shares of ADC common stock to be received by Andrew
stockholders in the merger and the implied premium represented
over various historical prices of Andrew common stock;
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the comparison of the premium implied by the exchange ratio ADC
offered when compared to various segmentations of similarly
sized transactions historically;
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the assessment of information regarding historical market prices
and other information with respect to Andrew common stock and
ADC common stock and the financial performance and condition,
assets, liabilities, business operations and prospects of each
of Andrew and ADC and their projected future values as separate
entities and on a combined basis;
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the expected increase in revenue growth and improved gross and
operating margins of the combined company when compared to
Andrews historical and projected operating performance;
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the reduction in overall exposure of the combined companys
business units to increasing copper prices due to greater
diversification of product lines;
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the merger is expected to result in cost synergies beginning in
the first year after consummation of the merger with preliminary
estimated annual pre-tax cost synergies beginning in the third
year after consummation of the merger of at least $70-80
million, with potential revenue synergies presenting additional
potential upside and, as stockholders in the combined company,
Andrew stockholders would be expected to enjoy a pro rata
benefit from any realized synergies;
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the merger is expected to be non-dilutive to the combined
companys earnings per share in the first year and
accretive thereafter, excluding purchase accounting adjustments
and other acquisition-related expenses;
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the expectation that increased revenue scale and breadth of
customers could strengthen the combined companys
competitive position in the midst of consolidation among service
providers and OEMs while also increasing scale with its
supplier base;
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the opinion of Merrill Lynch to Andrews board of directors
to the effect that, as of May 30, 2006 and based upon the
assumptions made, matters considered and limits of review set
forth in its written opinion, the exchange ratio pursuant to the
merger of 0.57 was fair, from a financial point of view, to the
holders of Andrew common stock;
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the fact that Andrew stockholders will own approximately 44% of
the combined company on a fully diluted basis and will have an
opportunity to participate in the potential growth of the
combined company;
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the fact that the merger is expected to be tax-free to Andrew
stockholders, except with respect to cash received in lieu of
fractional shares of ADC Andrew common stock;
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the results of the business, legal and financial due diligence
investigations of ADC conducted by Andrews management and
legal and financial advisors, and the resulting favorable
conclusions by the parties conducting the due diligence;
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the belief of Andrews board of directors that the terms of
the merger agreement, including the parties mutual
representations, warranties and covenants, are
reasonable; and
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|
the fact that, under the terms of the merger agreement, four
members of the combined companys board of directors will
be Andrew designees.
|
Andrews board of directors also identified and considered
a number of potentially negative factors and risks in its
deliberations concerning the merger, including, but not limited
to, the following (the order does not reflect relative
significance):
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the risk that the merger might not be completed as a result of a
failure to satisfy one or more conditions to the merger;
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51
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the risk that the operations of the two companies may not be
successfully integrated and the possibility of not achieving the
anticipated synergies and other benefits sought to be obtained
from the merger;
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|
the fact that the exchange ratio is fixed and, as a result,
there is a possibility that the value of the shares of ADC
common stock to be received by Andrew stockholders in the merger
could be more or less at closing than at the time of
announcement of the merger;
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the limitations on Andrews ability to solicit other offers
as well as the possibility that it could be required to pay a
termination fee of $75 million in various circumstances;
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|
the adverse impact that business uncertainty pending completion
of the merger could have on the ability to attract, retain and
motivate key personnel until the merger is completed;
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the fact that the merger agreement contains contractual
restrictions on the conduct of our business prior to the
completion of the merger; and
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|
other matters described in the section entitled Risk
Factors.
|
After deliberation, Andrews board of directors concluded
that, on balance, the potential benefits of the merger with ADC
outweighed these negative factors and risks.
The foregoing discussion of the information and factors to be
considered by Andrews board of directors is not intended
to be exhaustive, but includes all of the material factors
considered by the board of directors. In view of the wide
variety of factors considered by the board of directors, the
board of directors did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the foregoing
factors in reaching its conclusion. In addition, individual
members of the board of directors may have given different
weights to different factors and may have viewed some factors
more positively or negatively than others. The board of
directors approved the merger agreement based upon the totality
of the information presented to and considered by it.
ADC Board
of Directors Recommendation
After careful consideration, ADCs board of directors
recommends that ADC shareowners vote FOR
Proposal No. 1 to approve the issuance of shares of
ADC Andrew common stock in the merger.
Andrew
Board of Directors Recommendation
After careful consideration, Andrews board of directors
recommends that Andrew stockholders vote FOR
Proposal No. 1 to adopt the merger agreement.
Opinion
of ADCs Financial Advisor
Pursuant to the terms of an engagement letter dated May 12,
2006, ADC retained Dresdner Kleinwort Wasserstein Securities LLC
as a financial advisor in connection with the proposed merger.
At the meeting of the board of directors of ADC on May 30,
2006, DrKW rendered its oral opinion to the board of directors
of ADC, subsequently confirmed in writing, that, as of such
date, the exchange ratio provided for pursuant to the merger
agreement was fair to ADC from a financial point of view.
The full text of DrKWs opinion to the board of
directors of ADC, which sets forth, among other things, the
procedures followed, assumptions made, matters considered and
limitations on the review undertaken, is attached hereto as
Annex B and is incorporated into this joint proxy
statement/prospectus by reference. Holders of ADC common stock
are urged to read this opinion carefully and in its entirety.
DrKWs opinion is addressed to the board of directors of
ADC and relates only to the fairness from a financial point of
view to ADC of the exchange ratio in the merger. DrKWs
opinion does not address any other aspect of the proposed merger
or any related transaction and does not constitute a
recommendation to any shareholder as to any matter relating to
the merger.
52
Specifically, DrKWs opinion does not address ADCs
underlying business decision to effect the transactions
contemplated by the merger agreement nor the relative merits of
the merger as compared to any alternative transaction or
business strategy under consideration by ADC. It should be noted
that in the context of this engagement by ADC, DrKW was not
authorized to, and did not investigate any alternative
transactions that may be available to ADC. The summary of
DrKWs opinion in this joint proxy statement/prospectus is
qualified in its entirety by reference to the full text of the
opinion.
In connection with rendering its opinion, DrKW reviewed and
considered:
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|
a draft of the merger agreement, dated as of May 26, 2006,
and assumed that the final form of the merger agreement did not
differ in any material respect from the draft provided to DrKW;
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|
certain publicly available business and financial information
relating to ADC and Andrew for recent years and interim
periods; and
|
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|
certain internal financial and operating information, including
financial forecasts, analyses and projections prepared by or on
behalf of ADC and Andrew and provided to DrKW for purposes of
its analysis.
|
In addition, DrKW met with the management of ADC and Andrew to
review and discuss such information and, among other matters,
ADCs and Andrews business, operations, assets,
financial condition and future prospects.
DrKW also reviewed and considered:
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|
|
certain financial and stock market data relating to ADC and
Andrew and compared that data with similar data for certain
other companies, the securities of which are publicly traded,
that DrKW believes may be relevant or comparable in certain
respects to ADC and Andrew or one or more of their respective
businesses or assets; and
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|
the financial terms of certain recent acquisitions and business
combination transactions in the wireless equipment and
communications cable equipment industries specifically, and in
the technology industry generally, that DrKW believes to be
reasonably comparable to the merger or otherwise relevant to
DrKWs inquiry.
|
DrKW also performed such other financial studies, analyses, and
investigations and reviewed such other information as DrKW
considered appropriate for purposes of its opinion.
In its review and analysis and in formulating its opinion, DrKW
assumed and relied without independent verification upon:
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the accuracy and completeness of all of the historical financial
and other information provided to or discussed with DrKW or
publicly available; and
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|
the reasonableness and accuracy of the financial projections,
forecasts and analyses provided to DrKW, including estimates of
savings and other operating efficiencies expected to result from
consummation of the merger.
|
Furthermore, DrKW assumed that such projections, forecasts and
analyses provided to it were reasonably prepared in good faith
and on bases reflecting the best judgments and estimates of the
ADC and Andrew management available at that time. DrKW expresses
no opinion with respect to such projections, forecasts and
analyses or the assumptions upon which they are based, including
any projections, forecasts, analyses or assumptions with respect
to the commodities markets or any projected or actual future
prices for any commodities, or the effect thereof on ADC or
Andrew. In addition, DrKW did not review any of the books and
records of ADC or Andrew, or assume any responsibility for
conducting a physical inspection of the properties or facilities
of ADC or Andrew, or for making or obtaining an independent
valuation or appraisal of the assets or liabilities of ADC or
Andrew, and no such independent valuation or appraisal was
provided to DrKW.
DrKW noted that the merger is intended to qualify as a
reorganization for United States federal tax
purposes, and DrKW assumed that the merger will so qualify.
53
DrKW assumed that obtaining all regulatory and other approvals
and third party consents required for consummation of the merger
will not have an adverse impact on ADC or Andrew or on the
anticipated benefits of the merger, and DrKW assumed that the
transactions described in the merger agreement will be
consummated without waiver or modification of any of the
material terms or conditions contained therein by any party
thereto. DrKWs opinion is necessarily based on economic
and market conditions and other circumstances as they existed
and could be evaluated by DrKW as of May 30, 2006. DrKW did
not express any opinion as to the prices at which any securities
of Andrew or ADC will actually trade at any time.
In preparing its opinion to the ADC board of directors, DrKW
performed a variety of financial and comparative analyses
including those described below. The summary of DrKWs
analyses described below is not a complete description of the
analyses underlying its opinion. The preparation of a fairness
opinion is a complex analytical process involving various
determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods to
the particular circumstances and, therefore, a fairness opinion
is not readily susceptible to partial analysis or summary
description. In arriving at its opinion, DrKW made qualitative
judgments as to the significance and relevance of each analysis
and factor that it considered. Accordingly, DrKW believes that
its analyses must be considered as a whole and that selecting
portions of its analyses and factors or focusing on information
presented in tabular format, without considering all analyses
and factors or the narrative description of the analyses, could
create a misleading or incomplete view of the processes
underlying its analyses and opinion.
In its analyses, DrKW considered industry performance,
regulatory, general business, economic, market and financial
conditions and other matters, many of which are beyond the
control of ADC and Andrew. No company, transaction or business
used in DrKWs analyses as a comparison is identical to ADC
and Andrew or the proposed merger, and an evaluation of the
results of those analyses is not entirely mathematical. Rather,
the analyses involve complex considerations and judgments
concerning financial and operating characteristics and other
factors that could affect the merger, public trading or other
values of the companies, business segments or transactions being
analyzed.
DrKWs opinion and financial analyses were only one of many
factors considered by the board of directors of ADC in its
evaluation of the proposed merger and should not be viewed as
determinative of the views of the board of directors of ADC or
ADC management with respect to the merger or the exchange ratio.
Although DrKW evaluated the exchange ratio in the merger
agreement from a financial point of view, DrKW was not requested
to, and did not, recommend the specific consideration payable in
the merger. The merger consideration was determined by ADC and
Andrew.
The following is a summary of the material financial analyses
underlying DrKWs opinion delivered to the board of
directors of ADC in connection with the merger.
Contribution
Analysis
DrKW performed a contribution analysis based on
(1) historical results for ADC and Andrew for the first and
second quarter of 2006 and (2) ADC managements
projections for ADCs and Andrews financial
performance for the second half of 2006 and fiscal years 2006,
2007 and 2008. DrKW calculated that Andrews contribution
to a combined Andrew and ADC, without taking into account any
synergies in connection with the merger, ranged from:
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|
56.8% to 64.6% when calculated using historical and projected
revenues,
|
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|
45.1% to 57.8% when calculated using historical and projected
gross profit,
|
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|
|
39.1% to 70.2% when calculated using historical and projected
EBITDA,
|
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|
29.3% to 78.5% when calculated using historical and projected
adjusted operating profit,
|
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|
13.3% to greater than 100% when calculated using historical and
projected GAAP net income,
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|
18.6% to 71.1% when calculated using historical and projected
adjusted net income and
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|
21.6% to 66.4% when calculated using historical and projected
adjusted cash net income.
|
54
For purposes of this analysis, (i) adjusted operating
profit excludes amortization, restructuring and non-recurring
charges, (ii) adjusted net income excludes amortization,
restructuring and non-recurring charges and assumed tax rates of
10% and 34% for ADC and Andrew, respectively, in the forecasted
periods and (iii) adjusted cash net income excludes
amortization, restructuring, non-recurring charges and stock
option expense and assumed cash tax rates of 10% and 20% for ADC
and Andrew, respectively, in the forecasted periods.
DrKW compared Andrews revenue, gross profit, EBITDA
(earnings before interest, taxes, depreciation and
amortization), and adjusted operating profit to Andrews
share of the combined companys enterprise value of
approximately 45.9%. DrKW also compared Andrews GAAP net
income, adjusted net income and adjusted cash net income to
Andrews share of the combined companys equity value
of 43.8%. For the purpose of this comparison,
(i) Andrews enterprise and equity values were based
upon the closing price of ADC common stock on May 26, 2006
and the proposed exchange ratio of 0.57 and (ii) enterprise
value was calculated as equity value plus interest-bearing debt,
including unfunded pensions, minus cash and marketable
securities.
Accretion/Dilution
Analysis
DrKW considered the potential effect the merger could have on
the post-tax earnings per share of the combined entity as
compared with the post-tax earnings per share of ADC on a
stand-alone basis. This analysis was based upon ADC
managements projections for ADCs and Andrews
financial performance for fiscal years 2007, 2008 and 2009 and
ADC managements projections for potential cost and revenue
synergies and one-time transaction-related costs during the
forecasted periods. For purposes of this analysis,
(i) earnings per share were calculated in accordance with
Financial Accounting Standards Board EITF No.
04-08,
(ii) adjusted earnings per share excludes amortization,
restructuring and non-recurring charges and (iii) cash
adjusted earnings per share excludes amortization,
restructuring, non-recurring charges and stock option expense
and assumes cash tax rates of 10% and 20% for ADC and Andrew,
respectively, in the forecasted periods.
This analysis indicated that:
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|
|
without giving effect to potential cost and revenue synergies,
the merger could be dilutive to ADCs GAAP, adjusted and
cash adjusted earnings per share in fiscal years 2007, 2008 and
2009;
|
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|
|
giving effect to potential cost synergies, the merger could be
accretive to ADCs (i) GAAP and adjusted earnings per
share beginning in fiscal year 2009 and (ii) cash adjusted
earnings per share beginning in fiscal year 2007; and
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|
|
giving effect to both potential cost and revenue synergies, the
merger could be accretive to ADCs (i) GAAP earnings
per share beginning in fiscal year 2008, (ii) adjusted
earnings per share beginning in fiscal year 2009 and
(iii) cash adjusted earnings per share beginning in fiscal
year 2007.
|
The actual results achieved by the combined company after the
merger may vary from such estimated results and the variations
may be material.
55
Exchange
Ratio Analysis
DrKW reviewed the recent historical stock market performance of
ADC common stock and Andrew common stock in relation to each
other and reviewed the exchange ratios implied by those relative
trading values. In addition, DrKW compared the merger agreement
exchange ratio of 0.57 to the average exchange ratios over
certain specified time periods and noted the amount by which
such exchange ratios constituted a premium to such period
averages, including the information set forth below:
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|
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
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|
Last 5
|
|
|
Last 10
|
|
|
Last 20
|
|
|
Last 30
|
|
|
Last 60
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|
Last 90
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Last 3
|
|
|
Last 3
|
|
|
|
At
|
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|
Trading
|
|
|
Trading
|
|
|
Trading
|
|
|
Trading
|
|
|
Trading
|
|
|
Trading
|
|
|
Last 6
|
|
|
Last 12
|
|
|
LTM
|
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|
LTM
|
|
|
Last
|
|
|
Years
|
|
|
Years
|
|
|
|
5/26/06
|
|
|
Days
|
|
|
Days
|
|
|
Days
|
|
|
Days
|
|
|
Days
|
|
|
Days
|
|
|
Months
|
|
|
Months
|
|
|
High
|
|
|
Low
|
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|
3 Years
|
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|
High
|
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|
Low
|
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Mean
|
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|
0.433
|
x
|
|
|
0.426
|
x
|
|
|
0.434
|
x
|
|
|
0.453
|
x
|
|
|
0.469
|
x
|
|
|
0.484
|
x
|
|
|
0.491
|
x
|
|
|
0.491
|
x
|
|
|
0.523
|
x
|
|
|
0.756
|
x
|
|
|
0.420
|
x
|
|
|
0.700
|
x
|
|
|
1.139
|
x
|
|
|
0.420
|
x
|
Implied Premium/(Discount) at
Trading Value: 0.433x
|
|
|
|
|
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|
1.7
|
%
|
|
|
(0.2
|
)%
|
|
|
(4.4
|
)%
|
|
|
(7.6
|
)%
|
|
|
(10.6
|
)%
|
|
|
(11.8
|
)%
|
|
|
(11.8
|
)%
|
|
|
(17.2
|
)%
|
|
|
(42.7
|
)%
|
|
|
(3.0
|
)%
|
|
|
(38.1
|
)%
|
|
|
(62.0
|
)%
|
|
|
3.0
|
%
|
Implied Premium/(Discount) at Offer
Value: 0.570x
|
|
|
31.6
|
%
|
|
|
33.8
|
%
|
|
|
31.4
|
%
|
|
|
25.9
|
%
|
|
|
21.6
|
%
|
|
|
17.7
|
%
|
|
|
16.1
|
%
|
|
|
16.1
|
%
|
|
|
9.0
|
%
|
|
|
(24.6
|
)%
|
|
|
35.6
|
%
|
|
|
(18.6
|
)%
|
|
|
(50.0
|
)%
|
|
|
35.6
|
%
|
Comparable
Company Analysis
DrKW compared certain financial, operating and stock market data
of ADC and Andrew to corresponding data of the following
selected public wireless subsystems companies and selected
communications cable or connectivity companies:
Wireless Subsystems Companies:
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Harris;
|
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|
Powerwave;
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|
|
Anaren;
|
|
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|
Filtronic;
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|
Nera; and
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|
|
CalAmp.
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Communications Cable/Connectivity Companies:
|
|
|
|
|
Amphenol;
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|
CommScope; and
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|
Belden CDT.
|
Using publicly available information for these comparable
companies and closing stock prices on May 26, 2006, DrKW
calculated the ratio of enterprise value to last twelve months,
which we refer to as LTM, revenues and estimated revenues for
calendar years 2006 and 2007, as well as the ratio of enterprise
value to estimated and actual EBITDA and EBIT for such periods.
DrKW also examined prices per share as a multiple of estimated
and actual earnings per share for calendar years 2005, 2006 and
2007. DrKW then compared the multiples of comparable companies
to the multiples of Andrew derived from (i) enterprise
value/share price based on the closing price of Andrews
stock on May 26, 2006 and (ii) enterprise value/share
price implied by the closing price of ADC common stock on
May 26, 2006 and the proposed exchange ratio of 0.57. For
the purpose of this comparison, (i) DrKW used ADC
managements projections for Andrews financial
performance for the forecasted periods and (ii) enterprise
value was calculated as equity value plus interest-bearing debt,
including unfunded pensions, minus cash and marketable
securities. DrKW noted that the comparable company analysis does
not take into account any acquisition or control premium.
56
The following table summarizes the results of this analysis.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading
|
|
|
Value
|
|
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|
|
|
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|
|
|
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|
Value on
|
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|
Implied by
|
|
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|
|
|
|
|
|
|
|
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|
May 26,
|
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|
Exchange
|
|
|
|
Range
|
|
|
Median
|
|
|
Mean
|
|
|
2006
|
|
|
Ratio of 0.57
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|
|
Wireless Subsystems
Companies
|
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|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Value/LTM Revenues
|
|
|
0.5x -
|
|
|
|
2.9
|
x
|
|
|
1.2
|
x
|
|
|
1.4
|
x
|
|
|
0.9
|
x
|
|
|
1.2x
|
|
Enterprise Value/CY06E Revenues
|
|
|
0.5x -
|
|
|
|
2.6
|
x
|
|
|
1.0
|
x
|
|
|
1.3
|
x
|
|
|
0.8
|
x
|
|
|
1.1x
|
|
Enterprise Value/CY07E Revenues
|
|
|
0.5x -
|
|
|
|
1.5
|
x
|
|
|
0.8
|
x
|
|
|
0.9
|
x
|
|
|
0.8
|
x
|
|
|
1.0x
|
|
Enterprise Value/LTM EBITDA
|
|
|
7.0x -
|
|
|
|
16.4
|
x
|
|
|
10.7
|
x
|
|
|
11.0
|
x
|
|
|
10.8
|
x
|
|
|
14.1x
|
|
Enterprise Value/CY06E EBITDA
|
|
|
6.5x -
|
|
|
|
15.2
|
x
|
|
|
8.1
|
x
|
|
|
9.1
|
x
|
|
|
9.0
|
x
|
|
|
11.6x
|
|
Enterprise Value/CY07E EBITDA
|
|
|
5.5x -
|
|
|
|
8.7
|
x
|
|
|
6.1
|
x
|
|
|
6.6
|
x
|
|
|
7.1
|
x
|
|
|
9.2x
|
|
Enterprise Value/LTM EBIT
|
|
|
8.3x -
|
|
|
|
40.6
|
x
|
|
|
20.9
|
x
|
|
|
23.3
|
x
|
|
|
17.1
|
x
|
|
|
22.2x
|
|
Enterprise Value/CY06E EBIT
|
|
|
7.6x -
|
|
|
|
29.6
|
x
|
|
|
14.1
|
x
|
|
|
17.2
|
x
|
|
|
13.3
|
x
|
|
|
17.2x
|
|
Enterprise Value/CY07E EBIT
|
|
|
8.6x -
|
|
|
|
11.4
|
x
|
|
|
9.8
|
x
|
|
|
9.7
|
x
|
|
|
9.5
|
x
|
|
|
12.4x
|
|
Price Per Share/CY05A Earnings Per
Share
|
|
|
16.1x -
|
|
|
|
35.2
|
x
|
|
|
20.6
|
x
|
|
|
23.1
|
x
|
|
|
25.7
|
x
|
|
|
33.9x
|
|
Price Per Share/CY06E Earnings Per
Share
|
|
|
15.2x -
|
|
|
|
29.8
|
x
|
|
|
17.7
|
x
|
|
|
21.5
|
x
|
|
|
21.2
|
x
|
|
|
27.9x
|
|
Price Per Share/CY07E Earnings Per
Share
|
|
|
13.4x -
|
|
|
|
16.9
|
x
|
|
|
15.5
|
x
|
|
|
15.3
|
x
|
|
|
15.4
|
x
|
|
|
20.3x
|
|
Communications
Cable/Connectivity Companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Value/LTM Revenues
|
|
|
1.1x -
|
|
|
|
2.9
|
x
|
|
|
1.5
|
x
|
|
|
1.8
|
x
|
|
|
0.9
|
x
|
|
|
1.2x
|
|
Enterprise Value/CY06E Revenues
|
|
|
1.1x -
|
|
|
|
2.4
|
x
|
|
|
1.4
|
x
|
|
|
1.6
|
x
|
|
|
0.8
|
x
|
|
|
1.1x
|
|
Enterprise Value/CY07E Revenues
|
|
|
1.0x -
|
|
|
|
2.3
|
x
|
|
|
1.3
|
x
|
|
|
1.5
|
x
|
|
|
0.8
|
x
|
|
|
1.0x
|
|
Enterprise Value/LTM EBITDA
|
|
|
10.0x -
|
|
|
|
13.6
|
x
|
|
|
13.2
|
x
|
|
|
12.3
|
x
|
|
|
10.8
|
x
|
|
|
14.1x
|
|
Enterprise Value/CY06E EBITDA
|
|
|
8.4x -
|
|
|
|
11.7
|
x
|
|
|
11.0
|
x
|
|
|
10.3
|
x
|
|
|
9.0
|
x
|
|
|
11.6x
|
|
Enterprise Value/CY07E EBITDA
|
|
|
7.4x -
|
|
|
|
10.5
|
x
|
|
|
9.3
|
x
|
|
|
9.0
|
x
|
|
|
7.1
|
x
|
|
|
9.2x
|
|
Enterprise Value/LTM EBIT
|
|
|
12.6x -
|
|
|
|
23.2
|
x
|
|
|
22.0
|
x
|
|
|
22.0
|
x
|
|
|
17.1
|
x
|
|
|
22.2x
|
|
Enterprise Value/CY06E EBIT
|
|
|
11.0x -
|
|
|
|
17.0
|
x
|
|
|
15.5
|
x
|
|
|
16.5
|
x
|
|
|
13.3
|
x
|
|
|
17.2x
|
|
Enterprise Value/CY07E EBIT
|
|
|
9.3x -
|
|
|
|
13.4
|
x
|
|
|
10.6
|
x
|
|
|
10.8
|
x
|
|
|
9.5
|
x
|
|
|
12.4x
|
|
Price Per Share/CY05A Earnings Per
Share
|
|
|
24.1x -
|
|
|
|
29.7
|
x
|
|
|
26.8
|
x
|
|
|
26.9
|
x
|
|
|
25.7
|
x
|
|
|
33.9x
|
|
Price Per Share/CY06E Earnings Per
Share
|
|
|
19.6x -
|
|
|
|
25.1
|
x
|
|
|
20.2
|
x
|
|
|
21.6
|
x
|
|
|
21.2
|
x
|
|
|
27.9x
|
|
Price Per Share/CY07E Earnings Per
Share
|
|
|
17.4x -
|
|
|
|
20.8
|
x
|
|
|
17.4
|
x
|
|
|
18.5
|
x
|
|
|
15.4
|
x
|
|
|
20.3x
|
|
No company included in the comparable company analyses is
identical to Andrew. Accordingly, an analysis of the results of
such a comparison is not purely mathematical, but instead
involves complex considerations and judgments concerning
differences in historical and projected financial and operating
characteristics of the selected companies and other factors that
could affect the public trading value of the selected companies.
57
Comparable
Transactions Analysis
DrKW reviewed the financial terms of representative acquisition
transactions in the technology industry to the extent those
terms were publicly available. Specifically, DrKW included in
its review two groups of transactions. The first group consisted
of selected public wireless subsystems transactions since 2000.
These transactions were:
|
|
|
Acquiring Company
|
|
Target Company
|
|
CalAmp
|
|
Dataradio
|
Powerwave
|
|
Wireless Business (REMEC)
|
Powerwave
|
|
LGP Allgon
|
Andrew
|
|
Allen Telecom
|
LGP Telecom
|
|
Allgon
|
Andrew
|
|
Celiant
|
REMEC
|
|
Solitra Oy (ADC)
|
The second group of comparable acquisition transactions
consisted of selected public communications cable and
connectivity transactions since 2000. These transactions were:
|
|
|
Acquiring Company
|
|
Target Company
|
|
ADC
|
|
KRONE
|
Cable Design Technologies
|
|
Belden
|
CommScope
|
|
Connectivity Business (Avaya)
|
3M
|
|
Robinson Nugent
|
GenTek
|
|
Digital Comm. Group (Prestolite)
|
Tyco
|
|
Electronic OEM business
(Thomas & Betts)
|
Caradon
|
|
Brand-Rex
|
DrKW reviewed the enterprise values paid in the selected
transactions as a multiple of LTM sales, LTM EBITDA and LTM
EBIT. For purposes of this analysis, (i) the Cable Design
Technologies/Belden transaction LTM EBIT was excluded from the
mean and median for the selected public communications cable and
connectivity transactions and (ii) enterprise value was
calculated as equity value plus interest-bearing debt, including
unfunded pensions, minus cash and marketable securities. The
multiples derived from the selected transactions are indicated
in the following table. DrKW then compared the multiples derived
from the selected transactions to Andrews LTM sales,
EBITDA and LTM EBIT multiples based upon the enterprise value
implied by the closing price of ADC common stock on May 26,
2006 and the proposed exchange ratio of 0.57.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied by
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
|
|
|
|
Range
|
|
|
Median
|
|
|
Mean
|
|
|
Ratio of 0.57
|
|
|
Selected Wireless Subsystems
Transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Value/LTM Sales
|
|
|
0.5x -
|
|
|
|
1.7
|
x
|
|
|
1.2
|
x
|
|
|
1.1
|
x
|
|
|
1.2x
|
|
Enterprise Value/LTM EBITDA
|
|
|
4.7x -
|
|
|
|
15.7
|
x
|
|
|
10.2
|
x
|
|
|
10.2
|
x
|
|
|
14.1x
|
|
Enterprise Value/LTM EBIT
|
|
|
17.4x -
|
|
|
|
27.9
|
x
|
|
|
22.3
|
x
|
|
|
22.5
|
x
|
|
|
22.2x
|
|
Selected Communications
Cable/Connectivity Transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Value/LTM Sales
|
|
|
0.6x -
|
|
|
|
1.3
|
x
|
|
|
1.0
|
x
|
|
|
1.0
|
x
|
|
|
1.2x
|
|
Enterprise Value/LTM EBITDA
|
|
|
10.6x -
|
|
|
|
14.6
|
x
|
|
|
12.6
|
x
|
|
|
12.5
|
x
|
|
|
14.1x
|
|
Enterprise Value/LTM EBIT
|
|
|
15.4x -
|
|
|
|
68.7
|
x
|
|
|
20.4
|
x
|
|
|
22.4
|
x
|
|
|
22.2x
|
|
Aggregate of Comparable
Transaction Groups Summarized Above
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Value/LTM Sales
|
|
|
0.5x -
|
|
|
|
1.7
|
x
|
|
|
1.1
|
x
|
|
|
1.0
|
x
|
|
|
1.2x
|
|
Enterprise Value/LTM EBITDA
|
|
|
4.7x -
|
|
|
|
15.7
|
x
|
|
|
12.6
|
x
|
|
|
11.9
|
x
|
|
|
14.1x
|
|
Enterprise Value/LTM EBIT
|
|
|
15.4x -
|
|
|
|
68.7
|
x
|
|
|
22.3
|
x
|
|
|
22.4
|
x
|
|
|
22.2x
|
|
58
DrKW observed that the multiples derived from the exchange ratio
of 0.57 were within the range of the corresponding multiples for
the selected transactions analyzed.
Although the wireless subsystems and communications cable and
connectivity transactions were used for comparison purposes,
none of those transactions is directly comparable to the
transaction contemplated by ADC and Andrew, and none of the
companies in those transactions is directly comparable to ADC or
Andrew. Accordingly, an analysis of the results of such a
comparison is not purely mathematical, but instead involves
complex considerations and judgments concerning differences in
historical and projected financial and operating characteristics
of the companies involved and other factors that could affect
the acquisition value of the target companies.
Stock
Price Premiums Analysis
DrKW reviewed the premiums paid of representative acquisition
transactions in the United States technology industry since 2001
to the extent these were publicly available. Specifically, DrKW
included in its review such transactions (i) with
transaction values between $400 million and
$15 billion, (ii) in which the acquiror obtained board
control in the combined entity post-transaction,
(iii) consisting of all-stock or cash and stock with a
majority of stock consideration and (iv) following which
the acquirors stockholders owned between 51% and 75% of
the combined entity. These transactions were:
|
|
|
Acquiring Company
|
|
Target Company
|
|
Integrated Device Technology
|
|
Integrated Circuit Systems
|
American Tower
|
|
SpectraSite
|
Symantec
|
|
VERITAS Software
|
ARM Holdings
|
|
Artisan Components
|
Credence
|
|
NPTest
|
ST Assembly Test Services
|
|
ChipPAC
|
Ariba
|
|
Freemarkets
|
Powerwave
|
|
LGP Allgon
|
Conexant Systems
|
|
GlobespanVirata
|
Fair Isaac
|
|
HNC Software
|
Brooks Automation
|
|
PRI Automation
|
Sanmina
|
|
SCI Systems
|
TriQuint Semiconductor
|
|
Sawtek
|
The following table presents the premium of the offer price over
the trading prices one trading day, one week and one month prior
to the announcement date for the selected comparable
transactions listed above and the premiums implied for Andrew,
based on the exchange ratio in the merger and the closing prices
of ADC and Andrew common stock on May 26, 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied by
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
|
|
|
|
Range
|
|
|
Median
|
|
|
Mean
|
|
|
Ratio of 0.57
|
|
|
Selected Public Technology
Transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Day Premium to Target Price
|
|
|
8.9
|
% -
|
|
|
46.9
|
%
|
|
|
27.2%
|
|
|
|
28.0%
|
|
|
|
31.6%
|
|
1 Week Premium to Target Price
|
|
|
7.7
|
% -
|
|
|
58.5
|
%
|
|
|
27.8%
|
|
|
|
30.4%
|
|
|
|
36.0%
|
|
1 Month Premium to Target Price
|
|
|
(13.5
|
)% -
|
|
|
67.4
|
%
|
|
|
33.4%
|
|
|
|
34.3%
|
|
|
|
24.2%
|
|
DrKW observed that, based upon the exchange ratio of 0.57, the
premiums over Andrews trading prices one trading day, one
week and one month prior to the announcement date were within
the range of the corresponding premiums for the selected
transactions analyzed.
59
Discounted
Cash Flow Analysis
Using a discounted cash flow analysis, DrKW calculated certain
implied enterprise values and equity values of Andrew based on
the financial forecasts provided to DrKW by ADCs
management (i) on a stand-alone basis, (ii) after
giving effect to ADC managements estimates of cost
synergies and one-time cash transaction costs and
(iii) after giving effect to ADC managements
estimates of cost and revenue synergies. DrKW based its
discounted cash flow analysis on various operating assumptions
provided by ADCs management, including assumptions
relating to, among other items, revenue, EBITDA/EBIT margins,
depreciation and amortization, changes in working capital,
capital expenditures, and tax rates. DrKWs analysis used
discount rates ranging from 10.0% to 11.0% and terminal EBITDA
exit multiples in 2009 of 8.0x to 10.0x. Andrews equity
value was calculated as enterprise value minus interest-bearing
debt, including unfunded pensions, plus cash and marketable
securities. The following table summarizes the enterprise values
and equity values of Andrew implied by this analysis:
|
|
|
|
|
|
|
|
|
|
|
Implied Enterprise
Value
|
|
|
Implied Equity Value
|
|
|
|
(In millions)
|
|
|
(In millions)
|
|
|
Stand-Alone
|
|
$
|
2,160 - $2,688
|
|
|
$
|
1,975 - $2,503
|
|
Cost Synergies
|
|
$
|
2,634 - $3,294
|
|
|
$
|
2,449 - $3,109
|
|
All Synergies
|
|
$
|
2,769 - $3,462
|
|
|
$
|
2,583 - $3,277
|
|
DrKW noted that Andrews enterprise value and equity value
implied by the closing price of ADC common stock on May 26,
2006 and the proposed exchange ratio of 0.57 were
$2,305 million and $2,120 million, respectively.
DrKW has acted as one of ADCs financial advisors in
connection with the merger. ADC selected DrKW as a financial
advisor based on DrKWs experience, expertise and
reputation. DrKW is an internationally recognized investment
banking firm and is engaged regularly in the valuation of
businesses and securities in connection with mergers and
acquisitions and for other purposes.
DrKW acted as financial advisor to ADC in connection with the
proposed merger, and pursuant to an engagement letter dated
May 12, 2006, DrKW will receive a fee of approximately
$2,100,000 for its services in connection with the delivery of
its opinion. Pursuant to the engagement letter, DrKW will also
receive a fee for other advisory services provided to ADC in
connection with the merger and be reimbursed for its reasonable
expenses, including attorneys fees and disbursements. No
portion of DrKWs fee is contingent upon the consummation
of the merger.
In addition, DrKW has performed various investment banking
advisory services for ADC from time to time in the past and has
received customary fees for rendering such services.
In the ordinary course of its business, DrKW may actively trade
the debt and equity securities of ADC and Andrew for its own
account and for the accounts of customers. Accordingly, DrKW may
at any time hold a long or short position in such securities.
Opinion
of Andrews Financial Advisor
On May 30, 2006, Merrill Lynch delivered to Andrews
board of directors its oral opinion, which opinion was
subsequently confirmed in writing, to the effect that, as of
that date and based upon the assumptions made, matters
considered and limits of review set forth in its written
opinion, the exchange ratio pursuant to the merger of 0.57 was
fair, from a financial point of view, to the holders of Andrew
common stock. A copy of Merrill Lynchs written opinion is
attached to this joint proxy statement/prospectus as
Annex C. Merrill Lynch was not requested to and did not
provide any financial advisory services to Andrew in connection
with the merger, including advice concerning the structure, the
specific amount of the exchange ratio, or any other aspects of
the merger, other than the delivery of its opinion. Merrill
Lynch did not participate in negotiations with respect to the
exchange ratio or the other terms of the merger or the agreement.
Merrill Lynchs written opinion sets forth the
assumptions made, matters considered and limits on the scope of
review undertaken by Merrill Lynch. Each holder of Andrews
common stock is encouraged
60
to read Merrill Lynchs opinion in its entirety. Merrill
Lynchs opinion was intended for the use and benefit of
Andrews board of directors, does not address the merits of
the underlying decision by Andrew to enter into the merger
agreement or any of the transactions contemplated thereby,
including the merger, and does not constitute a recommendation
to any Andrew stockholder as to how that stockholder should vote
on the merger or any related matter. Merrill Lynch was not asked
to address nor does its opinion address the fairness to, or any
other consideration of, the holders of any class of securities,
creditors or other constituencies of Andrew, other than the
holders of Andrew common stock. This summary of Merrill
Lynchs opinion is qualified in its entirety by reference
to the full text of the opinion attached to this joint proxy
statement/prospectus as Annex C.
In arriving at its opinion, Merrill Lynch, among other things:
|
|
|
|
|
Reviewed certain publicly available business and financial
information relating to Andrew and ADC that it deemed to be
relevant;
|
|
|
|
Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets,
liabilities and prospects of Andrew and ADC as furnished to it
by Andrew and ADC, respectively, as well as the amount and
timing of the cost savings and related expenses and synergies
expected to result from the merger, which are referred to as the
expected synergies, furnished to it by Andrew;
|
|
|
|
Conducted discussions with members of senior management and
representatives of Andrew and ADC concerning the matters
described in the preceding two bullet points, as well as their
respective businesses and prospects before and after giving
effect to the transaction and the expected synergies;
|
|
|
|
Reviewed the market prices and valuation multiples for Andrew
common stock and ADC common stock and compared them with those
of certain publicly-traded companies that it deemed to be
relevant;
|
|
|
|
Reviewed the results of operations of Andrew and ADC and
compared them with those of certain publicly-traded companies
that it deemed to be relevant;
|
|
|
|
Reviewed the potential pro forma impact of the merger;
|
|
|
|
Reviewed the merger agreement; and
|
|
|
|
Reviewed such other financial studies and analyses and took into
account such other matters as were deemed necessary, including
an assessment of general economic, market and monetary
conditions.
|
In preparing its opinion, Merrill Lynch assumed and relied on
the accuracy and completeness of all information supplied or
otherwise made available to it, discussed with or reviewed by or
for it, or publicly available, and Merrill Lynch did not assume
any responsibility for independently verifying such information
or undertake an independent evaluation or appraisal of any of
the assets or liabilities of Andrew or ADC and was not furnished
with any such evaluation or appraisal, nor did it evaluate the
solvency or fair value of Andrew or ADC, under any state or
federal laws relating to bankruptcy, insolvency or similar
matters. In addition, Merrill Lynch did not assume any
obligation to conduct any physical inspection of the properties
or facilities of Andrew or ADC. With respect to the financial
forecast information and the expected synergies furnished to or
discussed with Merrill Lynch by Andrew or ADC, Merrill Lynch
assumed that such forecasts were reasonably prepared and
reflected the best currently available estimates and judgment of
Andrew or ADCs management as to the expected future
financial performance of Andrew or ADC, as the case may be, and
the expected synergies. Merrill Lynch further assumed that the
merger would qualify as a reorganization for
U.S. federal income tax purposes.
Merrill Lynchs opinion was necessarily based upon market,
economic and other conditions as they existed and could be
evaluated on, and on the information made available to it as of,
the date thereof. Merrill Lynch assumed that in the course of
obtaining the necessary regulatory or other consents or
approvals (contractual or otherwise) for the merger, no
restrictions, including any divestiture requirements or
amendments or modifications, would be imposed that would have a
material adverse effect on the contemplated benefits of the
merger.
61
In connection with the preparation of its opinion, Merrill Lynch
was not authorized by Andrew or Andrews board of directors
to solicit, nor did it solicit, third-party indications of
interest for the acquisition of all or any part of Andrew. In
addition, Merrill Lynch was not requested to and did not provide
any financial advisory services to Andrew in connection with the
merger, including advice concerning the structure, the specific
amount of the exchange ratio, or any other aspects of the
merger, other than the delivery of the opinion. Merrill Lynch
did not participate in negotiations with respect to the exchange
ratio or the other terms of the merger or the Agreement.
The following is a summary of the material financial and
comparative analyses performed by Merrill Lynch that were
presented to Andrews board of directors in connection with
the delivery of its opinion. Some of the financial analyses
summarized below include information presented in a tabular
format. In order to fully understand Merrill Lynchs
financial analyses, the tables must be read together with the
text of the summary. The tables alone do not constitute a
complete description of the financial analyses. Considering the
data set forth below in tables without considering the full
narrative description of the financial analyses, including the
methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of the financial analyses
performed by Merrill Lynch.
Transaction
Overview
Based upon the $23.05 closing price of ADC common stock on
May 26, 2006 and the exchange ratio pursuant to the merger
of 0.57, Merrill Lynch noted that the implied value of the
consideration to be received in the merger per share of Andrew
common stock as of that date was $13.14, which is referred to as
the implied consideration value. Based upon the implied
consideration value, approximately 161.653 million diluted
shares of Andrew common stock outstanding (calculated using the
treasury stock method), and approximately $158.1 million of
net debt (which includes convertible debt of
$240.0 million), Merrill Lynch also noted that the merger
implied a net offer value of approximately $2.124 billion,
and a transaction value of approximately $2.282 billion,
which is referred to as the implied transaction value.
Merrill Lynch compared the implied consideration value to the
closing price of Andrew common stock on May 26, 2006 and to
the average daily closing prices of Andrew common stock for
various time periods ending on that date and noted the following
implied offer premia:
|
|
|
|
|
|
|
|
|
|
|
Andrew
|
|
|
|
|
|
|
Common Stock
|
|
|
Implied
|
|
Time Period
|
|
Price
|
|
|
Premium*
|
|
|
Current (May 26, 2006)
|
|
$
|
9.98
|
|
|
|
31.6%
|
|
1-week
average
|
|
$
|
9.73
|
|
|
|
35.0%
|
|
4-week
average
|
|
$
|
10.15
|
|
|
|
29.5%
|
|
8-week
average
|
|
$
|
10.86
|
|
|
|
21.0%
|
|
12-week
average
|
|
$
|
11.56
|
|
|
|
13.7%
|
|
52-week
average
|
|
$
|
11.73
|
|
|
|
12.0%
|
|
|
|
|
* |
|
Based upon the implied consideration value of $13.14. |
Analysis
of Andrew
Historical
Trading Performance
Merrill Lynch reviewed the historical trading prices for the
Andrew common stock to provide background information on the
prices at which Andrew common stock has historically traded.
This review indicated that during the
52-week
period ending May 26, 2006, the Andrew common stock traded
as low as $9.35 per share and as high as $14.25 per
share, and during the three-month period ending May 26,
2006, the Andrew common stock traded as low as $9.47 and as high
as $13.74. These trading prices compared to the closing price of
Andrew common stock on May 26, 2006 of $9.98 and the
implied consideration value of $13.14.
62
Comparable
Public Companies Analysis
Using publicly available information, Merrill Lynch compared
certain financial and operating information, ratios and
valuation multiples for Andrew with corresponding financial and
operating information, ratios and valuation multiples for the
following five companies, which are referred to as the Andrew
comparable companies:
|
|
|
|
|
ADC Telecommunications, Inc.
|
|
|
|
Aeroflex Inc.,
|
|
|
|
Commscope Inc.,
|
|
|
|
Filtronic PLC, and
|
|
|
|
Powerwave Technologies Inc.
|
Using publicly available information and research estimates,
Merrill Lynch reviewed for each of these companies:
|
|
|
|
|
stock price as a multiple of estimated earnings per share for
fiscal year 2006, which is referred to below as 2006E
P/E; and
|
|
|
|
stock price as a multiple of estimated earnings per share for
fiscal year 2007, which is referred to below as 2007E P/E.
|
This analysis showed the following:
|
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|
|
|
|
|
|
|
|
|
|
|
Andrew Comparable Public
Companies Analysis
|
|
Multiple
|
|
High
|
|
|
Low
|
|
|
Mean
|
|
|
2006E P/E
|
|
|
24.1
|
x
|
|
|
15.8
|
x
|
|
|
19.5x
|
|
2007E P/E
|
|
|
21.2
|
x
|
|
|
12.3
|
x
|
|
|
16.7x
|
|
Merrill Lynch estimated implied equity value ranges per share of
Andrew common stock, based upon financial forecasts provided by
Andrew management, which are referred to as the Andrew
Management Case, and selected publicly available equity research
reports and consensus earnings per share estimates published by
First Call for the period 2006 through 2007, and projected
earnings per share and long-term growth rate published by First
Call and selected equity research reports and discussions with
Andrew management for the period 2008 through 2011, which are
collectively referred to as the Andrew Street Case. Using a
reference range of 14.0x to 17.0x Andrews estimated
earnings per share for fiscal year 2007, this analysis indicated
implied values per share of Andrew common stock of approximately
$9.50 to $11.50 under the Andrew Management Case and
approximately $8.50 to $10.25 under the Andrew Street Case,
compared to the closing price of Andrew common stock on
May 26, 2006 of $9.98 and the implied consideration value
of $13.14.
Discounted
Cash Flow Analysis
Merrill Lynch performed a discounted cash flow, or DCF, analysis
for Andrew. Merrill Lynch estimated the present value of the
standalone, unlevered, after-tax free cash flows that Andrew
could produce over the fiscal years 2007 through 2011 on a
standalone basis before giving effect to the expected synergies.
Estimated financial data was based upon the Andrew Management
Case and the Andrew Street Case. The range of terminal values
was derived by applying multiples ranging from 9.0x to 11.0x to
fiscal year 2011 estimated EBITDA. In order to derive implied
equity value per share ranges for Andrew, Merrill Lynch
discounted the free cash flows and terminal values to present
value using discount rates ranging from 16.0% to 18.0% and then
subtracted net debt.
This analysis indicated an implied equity value per share range
of Andrew common stock from approximately $9.25 to $12.00 under
the Andrew Management Case and from approximately $9.50 to
$12.25 under the Andrew Street Case, compared to the closing
price of Andrew common stock on May 26, 2006 of $9.98 and
the implied consideration value of $13.14.
63
Research
Analyst Price Targets
Merrill Lynch reviewed the most recent Wall Street research
equity analyst per share target prices for Andrew common stock,
which ranged from $11.00 to $13.00, compared to the closing
price of Andrew common stock on May 26, 2006 of $9.98 and
the implied consideration value of $13.14.
Analysis
of ADC
Historical
Trading Performance
Merrill Lynch reviewed the historical trading prices for the ADC
common stock to provide background information on the prices at
which ADC common stock has historically traded. This review
indicated that during the
52-week
period ending May 26, 2006, the ADC common stock traded as
low as $16.95 per share and as high as $27.90 per
share, and during the three-month period ending May 26,
2006, the ADC common stock traded as low as $21.54 and as high
as $26.40. These trading prices compared to the closing price of
ADC common stock on May 26, 2006 of $23.05.
Comparable
Public Companies Analysis
Using publicly available information, Merrill Lynch compared
certain financial and operating information, ratios and
valuation multiples for ADC with corresponding financial and
operating information, ratios and valuation multiples for the
following eight companies, which are referred to as the ADC
comparable companies:
|
|
|
|
|
Adtran, Inc.,
|
|
|
|
Amphenol Corp.,
|
|
|
|
Belden CDT, Inc.,
|
|
|
|
Commscope, Inc.,
|
|
|
|
Corning Inc.,
|
|
|
|
General Cable Corp.,
|
|
|
|
Harris Corp., and
|
|
|
|
Tellabs Inc.
|
Using publicly available information and research estimates,
Merrill Lynch reviewed for each of these companies:
|
|
|
|
|
stock price as a multiple of estimated earnings per share for
fiscal year 2006, which is referred to below as 2006E
P/E; and
|
|
|
|
stock price as a multiple of estimated earnings per share for
fiscal year 2007, which is referred to below as 2007E P/E.
|
This analysis showed the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
ADC Comparable Public Companies
Analysis
|
|
Multiple
|
|
High
|
|
|
Low
|
|
|
Mean
|
|
|
2006E P/E
|
|
|
24.1
|
x
|
|
|
18.4
|
x
|
|
|
20.5x
|
|
2007E P/E
|
|
|
19.5
|
x
|
|
|
14.6
|
x
|
|
|
17.2x
|
|
Merrill Lynch estimated implied equity value ranges per share of
ADC common stock, based upon both financial forecasts provided
by ADC management, which are referred to as the ADC Management
Case, and selected publicly available equity research reports
and consensus earnings per share estimates published by First
Call for the period 2006 through 2008, and projected earnings
per share and long-term growth rate published by First Call and
selected equity research reports and discussions with ADC
management for the period 2009 through 2011, which are
collectively referred to as the ADC Street Case. Using a
reference range
64
of 14.5x to 17.5x ADCs estimated earnings per share for
fiscal year 2007, this analysis indicated a range of implied
values per share of ADC common stock of approximately $22.00 to
$26.50 under the ADC Management Case and approximately $20.75 to
$25.00 under the ADC Street Case, compared to the closing price
of ADC common stock on May 26, 2006 of $23.05.
Discounted
Cash Flow Analysis
Merrill Lynch performed a discounted cash flow, or DCF, analysis
for ADC. Merrill Lynch estimated the present value of the
standalone, unlevered, after-tax free cash flows that ADC could
produce over the fiscal years 2007 through 2011 on a standalone
basis before giving effect to the expected synergies. Estimated
financial data was based upon the ADC Management Case and the
ADC Street Case. The range of terminal values was derived by
applying multiples ranging from 10.0x to 12.0x to fiscal year
2011 estimated EBITDA. In order to derive implied equity value
per share ranges for ADC, Merrill Lynch discounted the free cash
flows and terminal values to present value using discount rates
ranging from 14.0% to 16.0% and then subtracted net debt.
This analysis indicated an implied equity value per share range
of ADC common stock from approximately $18.75 to $23.00 under
the ADC Management Case and from approximately $18.50 to $22.75
under the ADC Street Case, compared to the closing price of ADC
common stock on May 26, 2006 of $23.05.
Research
Analyst Price Targets
Merrill Lynch reviewed the most recent Wall Street research
equity analyst per share target prices for ADC common stock,
which ranged from $26.00 to $32.00, compared to the closing
price of ADC common stock on May 26, 2006 of $23.05.
Exchange
Ratio Analysis
Historical
Implied Exchange Ratio Trading Analysis
Merrill Lynch reviewed the per share daily closing trading
prices for the Andrew common stock and the ADC common stock for
the three-year period ending May 26, 2006 to provide
background information on the prices at which Andrew and ADC
common stock have historically traded. For perspective on the
related prices at which Andrew and ADC common stock have
historically traded, Merrill Lynch calculated the historical
implied exchange ratios by dividing the daily closing prices of
Andrew common stock by those of ADC common stock. This analysis
showed the following implied exchange ratios, compared in each
case to the exchange ratio pursuant to the merger of 0.57:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied Exchange
Ratios
|
|
|
|
Low
|
|
|
Mean
|
|
|
High
|
|
|
Current (05/26/06)
|
|
|
0.433
|
x
|
|
|
0.433
|
x
|
|
|
0.433x
|
|
One Month
|
|
|
0.421
|
x
|
|
|
0.458
|
x
|
|
|
0.501x
|
|
Three Months
|
|
|
0.421
|
x
|
|
|
0.488
|
x
|
|
|
0.543x
|
|
Six Months
|
|
|
0.421
|
x
|
|
|
0.492
|
x
|
|
|
0.543x
|
|
One Year
|
|
|
0.420
|
x
|
|
|
0.524
|
x
|
|
|
0.761x
|
|
Two Years
|
|
|
0.420
|
x
|
|
|
0.678
|
x
|
|
|
1.108x
|
|
Three Years
|
|
|
0.420
|
x
|
|
|
0.700
|
x
|
|
|
1.139x
|
|
In addition, Merrill Lynch compared the exchange ratio pursuant
to the merger of 0.57 to the low, mean and high implied exchange
ratios over the same time periods and noted the amount by which
the exchange
65
ratio pursuant to the merger of 0.57 constituted a premium (or
discount) to the implied exchange ratios for such periods. This
analysis showed the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied
Premium/(Discount)
|
|
|
|
Low
|
|
|
Mean
|
|
|
High
|
|
|
Current (05/26/06)
|
|
|
31.6%
|
|
|
|
31.6
|
%
|
|
|
31.6
|
%
|
One Month
|
|
|
35.4%
|
|
|
|
24.4
|
%
|
|
|
13.8
|
%
|
Three Months
|
|
|
35.4%
|
|
|
|
16.8
|
%
|
|
|
5.0
|
%
|
Six Months
|
|
|
35.4%
|
|
|
|
16.0
|
%
|
|
|
5.0
|
%
|
One Year
|
|
|
35.6%
|
|
|
|
8.7
|
%
|
|
|
(25.1
|
)%
|
Two Years
|
|
|
35.6%
|
|
|
|
(15.9
|
)%
|
|
|
(48.5
|
)%
|
Three Years
|
|
|
35.6%
|
|
|
|
(18.5
|
)%
|
|
|
(50.0
|
)%
|
Based upon the
52-week and
three-month high and low trading prices for the Andrew common
stock and the ADC common stock noted above, Merrill Lynch
calculated a range of implied exchange ratios of a share of
Andrew common stock to a share of ADC common stock, in each case
compared to the exchange ratio pursuant to the merger of 0.57.
This analysis showed the following:
|
|
|
|
|
|
|
|
|
|
|
Implied Exchange Ratio
|
|
|
|
Low to High*
|
|
|
High to Low**
|
|
|
52-Week High/Low
|
|
|
0.335
|
x
|
|
|
0.841x
|
|
3-Month
High/Low
|
|
|
0.359
|
x
|
|
|
0.638x
|
|
|
|
|
* |
|
Calculated by dividing the low trading price of Andrew common
stock by the high trading price of ADC common stock. |
|
** |
|
Calculated by dividing the high trading price of Andrew common
stock by the low trading price of ADC common stock. |
Research
Analyst Price Targets
Merrill Lynch calculated implied exchange ratios by dividing the
high and low research equity analyst per share target prices for
Andrew common stock summarized above by the low and high
research equity analyst per share target prices for ADC common
stock summarized above. This analysis showed the following
implied exchange ratios, compared in each case to the exchange
ratio pursuant to the merger of 0.57:
|
|
|
|
|
|
|
|
|
|
|
Implied Exchange Ratio
|
|
|
|
Low to High*
|
|
|
High to Low**
|
|
|
Research Analyst Price Targets
|
|
|
0.344
|
x
|
|
|
0.500x
|
|
|
|
|
* |
|
Calculated by dividing the low research analyst per share target
price of Andrew common stock by the high research analyst per
share target price of ADC common stock. |
|
** |
|
Calculated by dividing the high research analyst per share
target price of Andrew common stock by the low research analyst
per share target price of ADC common stock. |
Relative
Comparable Public Companies Analysis
Based upon the implied equity values per share of Andrew common
stock and ADC common stock that were estimated using the
comparable public companies analyses described above, Merrill
Lynch calculated a range of implied exchange ratios of a share
of Andrew common stock to a share of ADC common stock, based upon
|
|
|
|
|
the Andrew Management Case and the ADC Management Case, and
|
|
|
|
the Andrew Street Case and the ADC Street Case.
|
66
This analysis yielded the following implied exchange ratios, in
each case compared to the exchange ratio pursuant to the merger
of 0.57:
|
|
|
|
|
|
|
|
|
|
|
Implied Exchange Ratio
|
|
|
|
Low to High*
|
|
|
High to Low**
|
|
|
Andrew Management Case and ADC
Management Case
|
|
|
0.358
|
x
|
|
|
0.523x
|
|
Andrew Street Case and ADC Street
Case
|
|
|
0.340
|
x
|
|
|
0.494x
|
|
|
|
|
* |
|
Calculated by dividing the low estimated valuation of Andrew
common stock by the high estimated valuation of ADC common
stock, both on the basis of 2007E P/E. |
|
** |
|
Calculated by dividing the high estimated valuation of Andrew
common stock by the low estimated valuation of ADC common stock,
both on the basis of 2007E P/E. |
Relative
DCF Analysis
Based upon the implied equity values per share of Andrew common
stock and ADC common stock that were estimated using the DCF
methodologies described above, Merrill Lynch calculated a range
of implied exchange ratios of a share of Andrew common stock to
a share of ADC common stock, based upon the Andrew and ADC
Management Case and the Andrew and ADC Street Case. This
analysis yielded the following implied exchange ratios, in each
case compared to the exchange ratio pursuant to the merger of
0.57:
|
|
|
|
|
|
|
|
|
|
|
Implied Exchange Ratio
|
|
|
|
Low to High*
|
|
|
High to Low**
|
|
|
Andrew Management Case and ADC
Management Case
|
|
|
0.402
|
x
|
|
|
0.640x
|
|
Andrew Street Case and ADC Street
Case
|
|
|
0.418
|
x
|
|
|
0.662x
|
|
|
|
|
* |
|
Calculated by dividing the low estimated valuation of Andrew
common stock by the high estimated valuation of ADC common stock. |
|
** |
|
Calculated by dividing the high estimated valuation of Andrew
common stock by the low estimated valuation of ADC common stock. |
Relative
Contribution Analysis
Merrill Lynch calculated the relative contributions of Andrew
and ADC to the combined company of projected EBITDA and cash net
income for fiscal years 2006 through 2009, respectively, in each
case before giving effect to the expected synergies based upon:
|
|
|
|
|
the Andrew Management Case and the ADC Management Case, and
|
|
|
|
the Andrew Street Case and the ADC Street Case.
|
This analysis yielded the following implied exchange ratios, in
each case compared to the exchange ratio pursuant to the merger
of 0.57:
|
|
|
|
|
|
|
|
|
|
|
Implied Exchange Ratio
|
|
|
|
Low
|
|
|
High
|
|
|
Andrew Management Case and ADC
Management Case
|
|
|
0.392
|
x
|
|
|
0.715x
|
|
Andrew Street Case and ADC Street
Case
|
|
|
0.368
|
x
|
|
|
0.699x
|
|
Pro Forma
Analysis
Merrill Lynch analyzed the potential pro forma effect of the
merger on Andrew stockholders for the years 2007 through 2009
using the Andrew Management Case and the ADC Management Case.
These projections assumed, among other factors, that the
combined company would achieve the expected synergies. The pro
forma impact was found to be accretive to earnings to Andrew
stockholders throughout the period.
67
The summary set forth above summarizes the material analyses
performed by Merrill Lynch but does not purport to be a complete
description of the analyses underlying the Merrill Lynch opinion
or the presentation made by Merrill Lynch to Andrews board
of directors. The preparation of a fairness opinion is a complex
analytic process and is not necessarily susceptible to partial
or summary description. Accordingly, Merrill Lynch believes that
its analyses must be considered as a whole and that selecting
portions of its analyses and the factors considered by Merrill
Lynch, without considering all analyses and factors, could
create an incomplete view of the processes underlying the
Merrill Lynch opinion. Merrill Lynch did not assign relative
weights to any of its analyses in preparing its opinion. The
matters considered by Merrill Lynch in its analyses were based
on numerous macroeconomic, operating and financial assumptions
with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond
the control of Andrew and Merrill Lynch, and involve the
application of complex methodologies and educated judgments. In
addition, no company utilized as a comparison in the analyses
described above is identical to Andrew or ADC.
Any estimates contained in the analyses performed by Merrill
Lynch are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than
suggested by such analyses. Additionally, estimates of the value
of businesses or securities do not purport to be appraisals or
to reflect the prices at which such businesses or securities
might actually be sold. Accordingly, such analyses and estimates
are inherently subject to substantial uncertainty. In addition,
as described above, the Merrill Lynch opinion was among several
factors taken into consideration by Andrews board of
directors in making its determination to approve the merger
agreement and the merger. Consequently, Merrill Lynchs
analyses should not be viewed as determinative of the decision
of Andrews board of directors with respect to the fairness
to Andrew of the exchange ratio pursuant to the merger of 0.57.
Andrews board of directors selected Merrill Lynch to
render a fairness opinion because Merrill Lynch is an
internationally recognized investment banking firm with
substantial experience in transactions similar to the mergers.
As part of its investment banking business, Merrill Lynch is
continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions,
leveraged buyouts, negotiated underwritings, secondary
distributions of listed and unlisted securities and private
placements.
Merrill Lynch acted as financial advisor to Andrew in connection
with the delivery of its opinion and will receive a fee from
Andrew for its services pursuant to a letter agreement dated as
of May 24, 2006. Pursuant to this letter agreement, Andrew
has paid Merrill Lynch for its services a fee of $1,500,000 in
cash upon delivery of its opinion. In addition, Andrew has
agreed to indemnify Merrill Lynch for certain liabilities
arising out of its engagement. Andrew has also agreed to
reimburse Merrill Lynch for its reasonable expenses, including
attorneys fees and disbursements.
Merrill Lynch may actively trade the Andrew common stock and
other securities of Andrew, as well as the ADC common stock and
other securities of ADC, for its own account and for the
accounts of its customers and for ADC and, accordingly, may at
any time hold a long or short position in such securities.
Interests
of Andrew Directors and Executive Officers in the
Merger
In considering the recommendation of Andrews board of
directors with respect to the merger, Andrew stockholders should
be aware that members of Andrews board of directors and
Andrews executive officers have interests in the merger
that differ from, or are in addition to, the interests of Andrew
stockholders. Andrews board of directors was aware of the
interests described below and considered them, among other
matters, when approving the merger agreement and recommending
that Andrew stockholders vote to adopt the merger agreement.
These interests are summarized below.
Election of Directors. As an integral part,
and contingent on completion, of the merger, four current
members of Andrews board of directors (Gerald A. Poch,
Anne F. Pollack, Glen O. Toney and Andrea L. Zopp) will be
elected to ADC Andrews board of directors as described in
this joint proxy/prospectus in the section entitled Andrew
Proposal No. 1 and ADC
Proposal No. 1 The Merger and the ADC
Andrew Share Issuance ADC Andrew Board of
Directors.
68
Stock Options and Other Stock-Based
Awards. Under the Andrew Corporation Management
Incentive Program and the Stock Option Plan for Non-Employee
Directors, all outstanding options to purchase shares of Andrew
common stock issued under those plans, including those held by
directors and executive officers of Andrew, vest automatically
at the closing of a merger, such as the proposed merger with
ADC. Based upon options outstanding as of June 15, 2006,
options held by directors and executive officers of Andrew
representing 934,400 shares of Andrew common stock will be
subject to accelerated vesting at the effective time of the
merger. In addition, 857,250 total restricted stock units
granted under the Andrew Corporation 2005 Long-Term Incentive
Plan held by directors and executive officers of Andrew will be
subject to accelerated vesting at the effective time of the
merger.
The compensation committee of Andrews board of directors
has approved an amendment to the Andrew Management Incentive
Program, subject to and contingent on completion of the merger,
to extend the exercise period of options that vest upon a change
in control, such as the merger. Prior to amendment, the plan
provided for a
90-day
exercise period with respect to such options. The amended plan
provides that upon completion of the merger, the exercise period
of options that vest upon a change in control shall expire on
the earlier of (a) the expiration of the applicable option
term or (b) the later of (i) the
15th day
of the third calendar month following the date on which the
option exercise period would otherwise expire pursuant to the
terms of the plan in effect immediately prior to the amendment
or (ii) the last day of the calendar year in which the
option exercise period would otherwise expire pursuant to the
terms of the plan in effect immediately prior to the amendment.
Such extended option period would also apply to all options held
by any Andrew employee whose employment, within 12 months
after completion of the merger, (I) terminates
involuntarily, (II) terminates for good reason
as provided in a retention agreement with ADC, or
(III) terminates at the close of a specified period under
the terms of a retention agreement with ADC, or whose services
under a consulting agreement with ADC terminate within such
12-month
period.
The Andrew Corporation Stock Option Plan for Non-Employee
Directors, as administered and interpreted by Andrews
Chief Financial Officer, provides for the following option
exercise periods:
|
|
|
|
|
Options that vest upon a change in control, such as the merger,
are exercisable for a period of 90 days thereafter. In
addition, to the extent options that vest upon a change in
control are not exercised within such
90-day
period, such options shall be exercisable until the earlier of
(i) the expiration of the applicable option term or
(ii) the expiration of a five-year period following the
change in control.
|
|
|
|
Options that have otherwise vested prior to a change in control,
such as the merger, will continue to be exercisable according to
the terms of the plan and the applicable option agreements as if
a change in control had not occurred. The
90-day
exercise period described above shall not apply to such
already-vested options.
|
69
The following table sets forth, as of June 15, 2006, the
number of shares of Andrew common stock subject to unvested
options held by directors and executive officers of Andrew, the
weighted average exercise prices of those options and the number
of shares of Andrew common stock subject to unvested restricted
stock units held by directors and executive officers of Andrew,
all of which will vest upon completion of the merger.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Weighted Average
|
|
|
Number of Shares
|
|
|
|
Subject to
|
|
|
Exercise Price
|
|
|
Subject to Unvested
|
|
Name of Director or Executive
Officer
|
|
Unvested Options
|
|
|
per Share($)
|
|
|
Restricted Stock Units
|
|
|
William Bax
|
|
|
0
|
|
|
|
n/a
|
|
|
|
5,000
|
|
Thomas A. Donahoe
|
|
|
4,800
|
|
|
$
|
9.45
|
|
|
|
10,000
|
|
Jere D. Fluno
|
|
|
4,800
|
|
|
$
|
9.45
|
|
|
|
10,000
|
|
William O. Hunt
|
|
|
4,800
|
|
|
$
|
9.45
|
|
|
|
10,000
|
|
Charles R. Nicholas
|
|
|
15,000
|
|
|
$
|
9.36
|
|
|
|
27,000
|
|
Gerald A. Poch
|
|
|
4,800
|
|
|
$
|
9.45
|
|
|
|
10,000
|
|
Anne F. Pollack
|
|
|
0
|
|
|
|
n/a
|
|
|
|
10,000
|
|
Glen O. Toney
|
|
|
4,800
|
|
|
$
|
9.45
|
|
|
|
10,000
|
|
Andrea L. Zopp
|
|
|
0
|
|
|
|
n/a
|
|
|
|
5,000
|
|
Justin Choi
|
|
|
50,000
|
|
|
$
|
13.64
|
|
|
|
25,000
|
|
John E. DeSana
|
|
|
50,000
|
|
|
$
|
10.50
|
|
|
|
60,800
|
|
John Dickson
|
|
|
35,000
|
|
|
$
|
10.58
|
|
|
|
37,050
|
|
Ralph E. Faison
|
|
|
309,500
|
|
|
$
|
10.49
|
|
|
|
166,575
|
|
Terry N. Garner
|
|
|
29,000
|
|
|
$
|
10.80
|
|
|
|
33,500
|
|
John C. Huang
|
|
|
30,000
|
|
|
$
|
10.79
|
|
|
|
52,950
|
|
Robert J. Hudzik
|
|
|
33,000
|
|
|
$
|
10.60
|
|
|
|
36,525
|
|
Marty R. Kittrell
|
|
|
80,000
|
|
|
$
|
10.77
|
|
|
|
66,100
|
|
James LePorte
|
|
|
26,000
|
|
|
$
|
10.86
|
|
|
|
31,325
|
|
Roger J. Manka
|
|
|
57,500
|
|
|
$
|
11.18
|
|
|
|
50,850
|
|
Carleton M. (Mickey) Miller
|
|
|
20,000
|
|
|
$
|
10.27
|
|
|
|
56,200
|
|
Jude T. Panetta
|
|
|
45,500
|
|
|
$
|
11.17
|
|
|
|
30,500
|
|
Karen Quinn-Quintin
|
|
|
55,000
|
|
|
$
|
10.48
|
|
|
|
46,375
|
|
Daniel J. Hartnett
|
|
|
12,900
|
|
|
$
|
10.64
|
|
|
|
12,125
|
|
Fred H. Lietz
|
|
|
21,500
|
|
|
$
|
10.62
|
|
|
|
22,475
|
|
Mark A. Olson
|
|
|
26,000
|
|
|
$
|
10.59
|
|
|
|
22,400
|
|
James F. Petelle
|
|
|
14,500
|
|
|
$
|
10.50
|
|
|
|
9,500
|
|
Under the terms of the merger agreement, all outstanding options
to purchase shares of Andrew common stock existing at the
effective time of the merger, including those held by directors
and executive officers of Andrew, will be assumed by ADC Andrew
and will become options to purchase shares of ADC Andrew common
stock with appropriate adjustments to be made to the number of
shares and the exercise price under such options based on the
exchange ratio. Under the merger agreement, all outstanding
restricted stock units settlable in shares of Andrew common
stock existing at the time of the completion of the merger,
including those held by directors and executive officers of
Andrew, will be assumed by ADC Andrew and will become restricted
stock units that, upon vesting, will be settled in shares of ADC
Andrew common stock. For a more complete description of the
treatment of Andrew stock options and restricted stock units,
see The Merger Agreement Treatment of
Stock Options and Restricted Stock Units.
Change in Control and Retention
Agreements. The closing of the merger will
constitute a change in control under agreements Andrew has
entered into with the following executive officers: Ralph E.
Faison, Justin Choi, John Dickson, John C. Huang, Marty R.
Kittrell, James LePorte, Karen Quinn-Quintin, Daniel J.
Hartnett, Fred H. Lietz, Mark A. Olson, and James F. Petelle.
These agreements have been modified by letter agreements between
ADC and the foregoing executive officers that are subject to,
and contingent on, the
70
completion of the merger. Under the change in control
agreements, as modified by the letter agreements with ADC, the
foregoing executive officers will be entitled to the following
payments and benefits:
|
|
|
|
|
An amount equal to the executive officers base pay
multiplied by: (A) 3 for Mr. Faison; (B) 2.5 for
Messrs. Choi, Dickson, Huang, Kittrell, LePorte and
Ms. Quinn-Quintin; and (C) 1 for each other executive
officer listed above;
|
|
|
|
An amount equal to the executive officers estimated bonus
(which shall be the greater of (A) the target bonus in
effect for the fiscal year in which the completion of the merger
occurs or (B) the average annual bonus actually payable to
the executive officer for the three fiscal years immediately
prior to the fiscal year in which the completion of the merger
occurs) multiplied by: (i) 3 for Mr. Faison;
(ii) 2.5 for Messrs. Choi, Dickson, Huang, Kittrell
and LePorte and Ms. Quinn-Quintin; and (iii) 1 for
each other executive officer listed above;
|
|
|
|
An amount equal to the executive officers bonus for the
fiscal year in which the completion of the merger occurs (which
shall be the greater of (A) the estimated bonus as
determined above or (B) the actual bonus the executive
officer would have earned for the fiscal year in which the
completion of the merger occurs based on performance prior to
the completion of the merger, reduced, if applicable, by any
bonus otherwise payable to the executive officer for such fiscal
year);
|
|
|
|
An amount equal to the profit-sharing and matching contributions
the executive officer would have received under the Andrew
Profit Sharing Trust and Andrew Employee Benefit Restoration
Plan during the applicable severance period designated in the
executive officers change in control agreement (which
severance period is (A) 36 months for Mr. Faison;
(B) 30 months for Messrs. Choi, Dickson, Huang,
Kittrell and LePorte and Ms. Quinn-Quintin; and
(C) 12 months for each other executive officer listed
above);
|
|
|
|
Immediate and full vesting of any long-term incentive awards. To
the extent that the amount of any long-term incentive award is
determined based on the attainment of performance goals, the
amount of such award shall be determined assuming the greatest
of (A) target performance, (B) actual performance
prior to completion of the merger, or (C) average
performance over the three-year period preceding the year in
which completion of the merger occurs; and
|
|
|
|
A perquisite cash payment representing the value of perquisites
the executive officer would have received from Andrew for:
(A) 36 months for Mr. Faison;
(B) 30 months for Messrs. Choi, Dickson, Huang,
Kittrell, and LePorte and Ms. Quinn-Quintin; and
(C) 12 months for each other executive officer listed
above, in each case including a gross-up payment in
an amount to cover any federal, state or local income taxes
(assuming the highest marginal tax rates) with respect to the
perquisite cash payment, excluding any additional taxes that may
be imposed under Section 409A of the Code, if applicable.
|
The foregoing amounts would be payable within 30 days after
completion of the merger. Their letter agreements with ADC are
further described below.
In addition to the amounts described above, in the event the
merger is completed and within 24 months thereafter
Messrs. Choi, Dickson, Huang, Kittrell, LePorte, Hartnett,
Lietz, Olson or Petelle or Ms. Quinn-Quintin terminates his
or her employment for good reason or is terminated by Andrew or
ADC other than for cause (as such terms are defined in the
Andrew change in control agreements), he or she would also be
entitled to the following:
|
|
|
|
|
If the executive officers employment termination occurs
during a fiscal year after the fiscal year in which completion
of the merger occurs, a pro rata estimated bonus for the fiscal
year in which employment termination occurs based on the number
of days in such fiscal year preceding the termination date. Such
bonus will be paid as soon as reasonably practicable following
six months after the termination date.
|
|
|
|
Payment of expenses incurred for outplacement services up to
$25,000.
|
71
|
|
|
|
|
Continued participation in Andrews group-term life and
disability plans (or plans providing equivalent benefits) for a
maximum period equal to the executive officers applicable
severance period ((A) 30 months for Messrs. Choi,
Dickson, Huang, Kittrell, and LePorte and
Ms. Quinn-Quintin; and (B) 12 months for
Messrs. Hartnett, Lietz, Olson and Petelle).
|
|
|
|
Continued participation in Andrews group health, dental
and vision plans (or plans providing equivalent benefits) for a
maximum period equal to the executive officers applicable
severance period. For those executives whose severance periods
exceed 18 months, in lieu of continuation coverage for the
portion of the severance period, if any, that extends beyond the
continuation coverage period required by federal law (which we
refer to as COBRA), the executive officer may, prior to
August 1, 2006, elect to receive the sum of (A) a lump
sum cash payment equal to the value of coverage for the
remaining period and (B) a gross-up payment in
an amount to cover any federal, state or local income taxes
(assuming the highest marginal tax rates but excluding any taxes
imposed under Section 409A of the Code) with respect to
such lump sum payment. The lump sum would be payable within
30 days of the expiration of the COBRA period and
contingent upon certification of lack of access to coverage by a
subsequent employer.
|
In addition to the amounts described above, the executive
officers listed above (including Mr. Faison) would also be
entitled to the following:
|
|
|
|
|
A gross-up payment in an amount to cover any
golden parachute excise tax imposed on the executive
officer under Section 4999 of the Internal Revenue Code and
any federal, state and local income tax and excise tax imposed
on that executive officer as a result of the receipt of the
gross-up
payment (but there shall be no gross-up payment by
reason of any excise tax imposed on the executive officer by
Section 409A of the Internal Revenue Code).
|
|
|
|
Payment of legal fees incurred by the executive officer in
enforcing his or her change in control agreement with Andrew or
letter agreement with ADC.
|
ADC has entered into letter agreements providing special
retention and severance payments with each of John E. DeSana,
Roger J. Manka, Carleton M. (Mickey) Miller, Robert J. Hudzik
and Jude T. Panetta who will continue employment with ADC Andrew
but who may have been entitled to a severance payment under a
change in control agreement with Andrew. These are subject to,
and contingent on, the completion of the merger. Under the
letter agreements with ADC, the foregoing officers will be
entitled to the following payments and benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payments Under Retention
Agreement
|
|
|
|
Special
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Retention
|
|
|
|
|
|
Severance
|
|
|
|
|
|
|
|
|
|
Payment
|
|
|
|
|
|
Payments
|
|
|
|
|
|
|
|
|
|
without
|
|
|
|
|
|
without
|
|
|
Estimated
|
|
|
|
|
Name of Executive
|
|
Gross-Up
|
|
|
Bonus
|
|
|
Gross-Up
|
|
|
Gross-Up
|
|
|
Total
|
|
|
John E. DeSana
|
|
$
|
2,008,991
|
(1)
|
|
|
319,600
|
|
|
$
|
76,250
|
(2)
|
|
|
586,442
|
|
|
|
2,991,283
|
|
Robert J. Hudzik
|
|
|
1,352,514
|
(3)
|
|
|
208,579
|
|
|
|
76,250
|
(2)
|
|
|
379,284
|
|
|
|
2,016,627
|
|
Roger J. Manka
|
|
|
1,843,153
|
(4)
|
|
|
293,250
|
|
|
|
76,250
|
(2)
|
|
|
555,803
|
|
|
|
2,768,456
|
|
Carleton M. (Mickey) Miller
|
|
|
2,008,991
|
(5)
|
|
|
319,600
|
|
|
|
76,250
|
(2)
|
|
|
521,759
|
|
|
|
2,926,600
|
|
Jude T. Panetta
|
|
|
1,275,656
|
(6)
|
|
|
182,000
|
|
|
|
76,250
|
(2)
|
|
|
395,614
|
|
|
|
1,929,520
|
|
|
|
|
(1) |
|
Three retention payments of $669,664 each, paid within 10
business days, 9 months and 18 months, respectively,
following the merger effective date. |
|
(2) |
|
Perquisite and welfare benefit cash payment. |
|
(3) |
|
A payment of $1,171,447 paid within 10 business days following
the merger effective date and a payment of $181,067 paid
18 months following the merger effective date. |
72
|
|
|
(4) |
|
Three payments of $614,385 each, paid within 10 business days,
9 months and 18 months, respectively, following the
merger effective date. |
|
(5) |
|
Two payments of $669,664 each, paid within 10 business days and
9 months, respectively, following the merger effective
date, and a payment of $669,663 paid 18 months following
the merger effective date. |
|
(6) |
|
A payment of $1,105,000 paid within 10 business days following
the merger effective date and a payment of $170,656 paid
18 months following the merger effective date. Included in
change in control payment table above. |
The special retention amounts would be payable in installments
over an
18-month
period following completion of the merger (three installments in
the case of Messrs. DeSana, Manka and Miller, and two
installments in the case of Messrs. Hudzik and Panetta).
Payment of such amounts are contingent upon the executive
officers continued employment with ADC over the
18-month
period (except as provided below with respect to involuntary
termination without cause), with the first installment payable
within 10 business days after completion of the merger. Bonus
amounts would be payable in a lump sum as soon as
administratively feasible after completion of the merger when
the bonus payable for the relevant fiscal year is known.
In the case of Messrs. DeSana, Manka and Miller, in the
event the merger is completed and within 18 months
thereafter the executive is involuntarily terminated other than
for cause (as such term is defined in the ADC letter agreement)
or the executive (excluding Mr. DeSana) is required to
relocate his principal office by more than 50 miles from
its location immediately prior to the merger, subject to
executing a release in favor of ADC, he would be entitled to the
following (as reflected in the above table):
|
|
|
|
|
The balance of the payments remaining under his agreement with
ADC;
|
|
|
|
A lump sum amount equal to $76,250, which is intended to
recognize the approximate value of the welfare benefit plan
continuation and perquisites continuation that would have been
available to him; and
|
|
|
|
Severance compensation under any severance plan or practice of
ADC then in effect for similarly situated employees (if
termination of the executives employment occurred after
the 18-month
anniversary of the merger).
|
In the case of Messrs. Hudzik and Panetta, in the event the
merger is completed and within 18 months either executive
is involuntarily terminated other than for cause (as such term
is defined in the ADC letter agreement), subject to executing a
release in favor of ADC, as reflected in the above table, he
would be entitled to the following:
|
|
|
|
|
The balance of the payments remaining under his agreement with
ADC;
|
|
|
|
A lump sum amount equal to $76,250, which is intended to
recognize the approximate value of the welfare benefit plan
continuation and perquisites continuation that would have been
available to him;
|
|
|
|
An amount equal to one months base salary multiplied by
the number of months the executive worked for the combined
company after the effective date of the merger up to his date of
termination (if the executives termination occurred within
one year after the effective date of the merger); and
|
|
|
|
Severance compensation under any severance plan or practice of
ADC then in effect for similarly situated employees (if the
executives termination occurred more than one year after
the effective date of the merger).
|
In addition to the amounts described above, Messrs. DeSana,
Manka, Miller, Hudzik and Panetta would also be entitled to a
gross-up payment in an amount to cover any
golden parachute excise tax imposed on the executive
officer under Section 4999 of the Internal Revenue Code and
any federal, state and local income tax and excise tax imposed
on that executive officer as a result of the receipt of the
gross-up
payment (but there shall be no gross-up payment by
reason of any excise tax imposed on the executive officer by
Section 409A of the Internal Revenue Code). Their
agreements with ADC do not provide for a waiver of their rights
to immediate and full vesting of long-term incentive and stock
compensation upon a change in control, nor to full vesting under
the Andrew Employee Retirement Benefits Restoration Plan.
73
The closing of the merger will constitute a change in control
under an agreement that Allen Telecom Inc. entered into with
Terry N. Garner prior to the acquisition of Allen Telecom Inc.
by Andrew. Under this agreement, if Mr. Garners
employment is terminated by Andrew or ADC Andrew for other than
cause or disability, or if Mr. Garner terminates his
employment for good reason (as cause,
disability and good reason are defined
in the agreement), Mr. Garner will be entitled to the
following payments and benefits:
|
|
|
|
|
Base salary through the employment termination date, accrued
vacation and all other amounts to which Mr. Garner is
entitled under any compensation plan of Andrew or ADC Andrew;
|
|
|
|
A lump sum cash payment equal to one times base salary as in
effect as of the employment termination date or immediately
prior to the change in control, whichever is greater (the
base severance payment);
|
|
|
|
A lump sum cash payment equal to the highest annual incentive
compensation paid to Mr. Garner within the three years
prior to his employment termination date (the severance
incentive payment);
|
|
|
|
An additional discretionary bonus payment if the board of
directors, in its sole discretion, so determines;
|
|
|
|
15% of the sum of the base severance payment and the severance
incentive payment multiplied by the number of
Mr. Garners aggregate completed years of full-time
employment with Allen Telecom Inc., Andrew and ADC
Andrew; and
|
|
|
|
A lump sum cash settlement of all outstanding stock options
issued to Mr. Garner, such cash payment being equal to the
number of shares covered by such options multiplied by the
excess over the option price of the greater of (i) the
closing price of the applicable shares on or nearest the
employment termination date or (ii) the highest price per
share paid in connection with the merger.
|
In addition to the amounts described above, in the event the
merger is completed and thereafter Mr. Garners
employment is terminated by Andrew or ADC Andrew other than for
cause, or is terminated by Mr. Garner for good reason, he
would also be entitled to the following:
|
|
|
|
|
Life, disability, accident and group health insurance benefits
for a period of months following employment termination that is
equal to the sum of (i) 12 and (ii) the product of
0.15 multiplied by (A) the number of Mr. Garners
aggregate completed years of full-time employment with Allen
Telecom Inc., Andrew and ADC Andrew as of his employment
termination date multiplied by (B) 12, but in no
event more than 36 months. Such insurance benefits shall be
substantially similar to those that Mr. Garner was
receiving immediately prior to the employment termination notice
described in the agreement but shall be reduced to the extent
comparable benefits are actually received by Mr. Garner
from any other source.
|
|
|
|
Payment of legal fees and expenses incurred by Mr. Garner
as a result of his employment termination, including all such
fees and expenses incurred in enforcing his agreement.
|
The foregoing severance payments and benefits shall be
forfeitable and discontinued in the event that Mr. Garner
engages in competitive activity during the one-year period
following his employment termination date.
In the event that by reason of Section 280G of the Code,
Mr. Garners payments and benefits received or to be
received in connection with a change in control, such as the
merger, or in connection with his employment termination under
the foregoing agreement or any other plan, arrangement or
agreement would not be deductible by the payor, the severance
payments under the foregoing agreement shall be reduced until no
portion of the payments are not deductible by reason of such
Section 280G.
Employment decisions regarding the combined company post-merger
have not yet been finalized, except that it has been determined
that ADCs Robert E. Switz will be the combined
companys President and Chief Executive Officer. It is
possible that some or all of Andrews executive officers
will be terminated in connection with the merger on terms that
would entitle them to benefits under the change in control
agreements as described above. Based on Andrews current
calculations, if all of the executive officers were
74
terminated under circumstances that would result in payment of
the benefits under the change in control and retention
agreements, the executive officers would be entitled to
aggregate benefits as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payments Under Change in
Control Agreement
|
|
|
|
Payment without
|
|
|
Estimated
|
|
|
|
|
Name of Executive
|
|
Gross-Up
|
|
|
Gross-Up
|
|
|
Total
|
|
|
Ralph E. Faison
|
|
$
|
6,259,833
|
(1)
|
|
$
|
1,736,151
|
|
|
$
|
7,995,984
|
|
Justin Choi
|
|
|
1,671,191
|
(2)
|
|
|
447,200
|
|
|
|
2,118,391
|
|
John Dickson
|
|
|
1,477,669
|
(3)
|
|
|
358,975
|
|
|
|
1,836,644
|
|
John C. Huang
|
|
|
1,963,408
|
(4)
|
|
|
465,115
|
|
|
|
2,428,523
|
|
Marty R. Kittrell
|
|
|
2,573,387
|
(5)
|
|
|
679,919
|
|
|
|
3,253,306
|
|
James LePorte
|
|
|
1,497,813
|
(6)
|
|
|
0
|
|
|
|
1,497,813
|
|
Karen Quinn-Quintin
|
|
|
1,801,534
|
(7)
|
|
|
428,538
|
|
|
|
2,230,072
|
|
Daniel J. Hartnett
|
|
|
457,462
|
(8)
|
|
|
0
|
|
|
|
457,462
|
|
Fred H. Lietz
|
|
|
514,055
|
(9)
|
|
|
0
|
|
|
|
514,055
|
|
Mark A. Olson
|
|
|
562,498
|
(10)
|
|
|
0
|
|
|
|
562,498
|
|
James F. Petelle
|
|
|
384,232
|
(11)
|
|
|
0
|
|
|
|
384,232
|
|
|
|
|
(1) |
|
Payments equal to the sum of: (i) $4,273,425 (three times
base salary and bonus), (ii) $842,023 (long-term incentive
cash payment), (iii) $791,375 (guaranteed bonus),
(iv) $170,510 (profit sharing and matching contributions
the executive would have received under the Andrew Profit
Sharing Trust and Andrew Employee Benefit Restoration Plan
during his
36-month
severance period), (v) $45,000 (perquisite cash payment),
(vi) $112,500 (welfare benefit cash payment) and
(vii) $25,000 (outplacement services). |
|
(2) |
|
Payments equal to the sum of: (i) $1,211,250 (2.5 times
base salary and bonus), (ii) $85,500 (long-term incentive
cash payment), (iii) $199,500 (guaranteed bonus),
(iv) $37,441 (profit sharing and matching contributions the
executive would have received under the Andrew Profit Sharing
Trust and Andrew Employee Benefit Restoration Plan during his
30-month
severance period), (v) $37,500 (perquisite cash payment),
(vi) $75,000 (welfare benefit cash payment) and
(vii) $25,000 (outplacement services). |
|
(3) |
|
Payments equal to the sum of: (i) $1,048,475 (2.5 times
base salary and bonus), (ii) $88,812 (long-term incentive
cash payment), (iii) $172,690 (guaranteed bonus),
(iv) $30,192 (profit sharing and matching contributions the
executive would have received under the Andrew Profit Sharing
Trust and Andrew Employee Benefit Restoration Plan during his
30-month
severance period), (v) $37,500 (perquisite cash payment),
(vi) $75,000 (welfare benefit cash payment) and
(vii) $25,000 (outplacement services). |
|
(4) |
|
Payments equal to the sum of: (i) $1,434,584 (2.5 times
base salary and bonus), (ii) $89,404 (long-term incentive
cash payment), (iii) $254,534 (guaranteed bonus),
(iv) $47,387 (profit sharing and matching contributions the
executive would have received under the Andrew Profit Sharing
Trust and Andrew Employee Benefit Restoration Plan during his
30-month
severance period), (v) $37,500 (perquisite cash payment),
(vi) $75,000 (welfare benefit cash payment) and
(vii) $25,000 (outplacement services). |
|
(5) |
|
Payments equal to the sum of: (i) $1,850,000 (2.5 times
base salary and bonus), (ii) $180,000 (long-term incentive
cash payment), (iii) $340,000 (guaranteed bonus),
(iv) $65,887 (profit sharing and matching contributions the
executive would have received under the Andrew Profit Sharing
Trust and Andrew Employee Benefit Restoration Plan during his
30-month
severance period), (v) $37,500 (perquisite cash payment),
(vi) $75,000 (welfare benefit cash payment) and
(vii) $25,000 (outplacement services). |
|
(6) |
|
Payments equal to the sum of: (i) $1,083,750 (2.5 times
base salary and bonus), (ii) $66,300 (long-term incentive
cash payment), (iii) $178,500 (guaranteed bonus),
(iv) $31,763 (profit sharing and matching contributions the
executive would have received under the Andrew Profit Sharing
Trust and Andrew Employee Benefit Restoration Plan during his
30-month
severance period), (v) $37,500 (perquisite cash payment),
(vi) $75,000 (welfare benefit cash payment) and
(vii) $25,000 (outplacement services). |
|
(7) |
|
Payments equal to the sum of: (i) $1,302,375 (2.5 times
base salary and bonus), (ii) $90,210 (long-term incentive
cash payment), (iii) $229,950 (guaranteed bonus),
(iv) $41,499 (profit sharing and matching contributions the
executive would have received under the Andrew Profit Sharing
Trust and Andrew |
75
|
|
|
|
|
Employee Benefit Restoration Plan during her
30-month
severance period), (v) $37,500 (perquisite cash payment),
(vi) $75,000 (welfare benefit cash payment) and
(vii) $25,000 (outplacement services). |
|
(8) |
|
Payments equal to the sum of: (i) $299,600 (one times base
salary and bonus), (ii) $38,520 (long-term incentive cash
payment), (iii) $85,600 (guaranteed bonus),
(iv) $6,742 (profit sharing and matching contributions the
executive would have received under the Andrew Profit Sharing
Trust and Andrew Employee Benefit Restoration Plan during his
12-month
severance period), (v) $2,000 (perquisite cash payment),
and (vi) $25,000 (outplacement services). |
|
(9) |
|
Payments equal to the sum of: (i) $321,000 (one times base
salary and bonus), (ii) $51,360 (long-term incentive cash
payment), (iii) $107,000 (guaranteed bonus),
(iv) $7,695 (profit sharing and matching contributions the
executive would have received under the Andrew Profit Sharing
Trust and Andrew Employee Benefit Restoration Plan during his
12-month
severance period), (v) $2,000 (perquisite cash payment),
and (vi) $25,000 (outplacement services). |
|
(10) |
|
Payments equal to the sum of: (i) $352,500 (one times base
salary and bonus), (ii) $56,400 (long-term incentive cash
payment), (iii) $117,500 (guaranteed bonus),
(iv) $9,098 (profit sharing and matching contributions the
executive would have received under the Andrew Profit Sharing
Trust and Andrew Employee Benefit Restoration Plan during his
12-month
severance period), (v) $2,000 (perquisite cash payment),
and (vi) $25,000 (outplacement services). |
|
(11) |
|
Payments equal to the sum of: (i) $253,120 (one times base
salary and bonus), (ii) $27,120 (long-term incentive cash
payment), (iii) $72,320 (guaranteed bonus),
(iv) $4,672 (profit sharing and matching contributions the
executive would have received under the Andrew Profit Sharing
Trust and Andrew Employee Benefit Restoration Plan during his
12-month
severance period), (v) $2,000 (perquisite cash payment),
and (vi) $25,000 (outplacement services). |
In addition, ADC has extended employment offers to the following
Andrew executive officers for either an indefinite, unspecified
period or for a specified transition period following completion
of the merger, as described below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized Rate of
|
|
|
|
|
Name of Executive
|
|
Retention Term
|
|
Base Pay ($)
|
|
|
Retention Bonus
|
|
|
Justin Choi
|
|
2 mos.
|
|
$
|
285,000
|
|
|
$
|
47,500
|
|
John E. DeSana
|
|
Indefinite
|
|
$
|
430,000
|
|
|
|
|
(1)
|
John Dickson
|
|
3 mos.
|
|
$
|
246,700
|
|
|
$
|
61,675
|
|
John C. Huang
|
|
3 mos.
|
|
$
|
319,300
|
|
|
$
|
79,825
|
|
Robert J. Hudzik
|
|
Indefinite
|
|
$
|
286,000
|
|
|
|
|
(1)
|
Marty R. Kittrell
|
|
2 mos.
|
|
$
|
400,000
|
|
|
$
|
66,667
|
|
James LePorte
|
|
6 mos.
|
|
$
|
255,000
|
|
|
$
|
127,500
|
|
Roger J. Manka
|
|
Indefinite
|
|
$
|
410,000
|
|
|
|
|
(1)
|
Carleton M. (Mickey) Miller
|
|
Indefinite
|
|
$
|
430,000
|
|
|
|
|
(1)
|
Jude T. Panetta
|
|
Indefinite
|
|
$
|
286,000
|
|
|
|
|
(1)
|
Karen Quinn-Quintin
|
|
2 mos.
|
|
$
|
291,000
|
|
|
$
|
48,500
|
|
Daniel J. Hartnett
|
|
6 mos.
|
|
$
|
214,000
|
|
|
$
|
107,000
|
|
Fred H. Lietz
|
|
6 mos.
|
|
$
|
214,000
|
|
|
$
|
107,000
|
|
Mark A. Olson
|
|
6 mos.
|
|
$
|
235,000
|
|
|
$
|
117,500
|
|
James F. Petelle
|
|
6 mos.
|
|
$
|
180,800
|
|
|
$
|
90,400
|
|
|
|
|
(1) |
|
See table above entitled Cash Payments Under Retention
Agreement. |
The letter agreements between ADC and each of
Messrs. DeSana, Manka, Miller, Hudzik and Panetta also
provide for each executive (A) a bonus of a specified
amount reduced by any bonus paid or payable for that fiscal year
(the specified amounts are $319,600 for Mr. DeSana,
$208,579 for Mr. Hudzik, $293,250 for Mr. Manka,
$319,600 for Mr. Miller, and $182,000 for
Mr. Panetta), (B) annual incentive compensation under
76
the ADC Management Incentive Plan, which provides a target
opportunity of a specified percentage of salary paid during the
fiscal year (the specified percentages are 85% for
Mr. Manka, 70% for each of Messrs. DeSana and Miller,
and 55% for each of Messrs. Hudzik and Panetta), (C) a
grant of options to acquire common stock of ADC (60,000 options
in the case of Messrs. DeSana, Manka and Miller, and 25,000
options in the case of Messrs. Hudzik and Panetta), and
(D) a grant of ADC restricted stock units (30,000
restricted stock units in the case of Messrs. DeSana, Manka
and Miller and 12,500 restricted stock units in the case of
Messrs. Hudzik and Panetta). In each case, the effective
date of the stock option and restricted stock unit grants will
be the last business day of the month in which the
executives employment with the combined company begins,
and the terms of such grants will be governed by the plan
documents, guidelines and practices of ADCs Stock Program.
Subject to, and contingent on, the completion of the merger, ADC
has offered to Mr. Faison a six-month consulting agreement
to begin upon completion of the merger, which agreement could be
extended beyond six months upon mutual agreement of the parties
or terminated early by either party upon one months prior
written notice to the other party. For his consulting services,
Mr. Faison would be paid $100,000 per month. If ADC
terminated Mr. Faisons consulting agreement prior to
the end of the initial six-month term, Mr. Faison would be
entitled to payment of an amount equal to $100,000 multiplied by
the number of months remaining under the agreement.
Other
Change in Control Payments
Employee Retirement Benefit Restoration
Plan. Upon completion of the merger, any portion
of a participants account under the Andrew Corporation
Employee Retirement Benefit Restoration Plan that was not
previously forfeited or vested will become fully vested and
payable. The balance of such account will be credited from the
beginning of the plan year in which the merger occurs through
the effective date of the merger with earnings and losses at a
rate equal to the weighted average rate of return achieved by
the participant with respect to his or her accounts under the
Andrew Profit Sharing Trust for the same period. Following the
completion of the merger, each participant (or beneficiary
thereof) in the plan will be entitled to a lump sum payment of
his or her plan account as determined in accordance with the
terms of the plan.
Performance Cash Agreement. If the merger is
completed prior to the end of the performance period applicable
to performance cash awards granted under the Andrew Management
Incentive Program, upon completion of the merger, all
outstanding performance cash awards that were not previously
forfeited or vested shall become fully vested and payable as if
the performance goal established for such awards had been
attained as of the merger effective date, and each grantee will
be entitled to a lump sum payment of his or her performance cash
awards as determined in accordance with the terms of the plan
and the applicable award agreements.
Directors and Executive Officers Indemnification and
Insurance. The merger agreement provides that the
surviving corporation in the merger will indemnify, and provide
advance expenses to, each person who has been at any time on or
before the date of the merger agreement, or who becomes before
the completion of the merger, an officer, director or employee
of Andrew or any of its subsidiaries against all losses, claims,
damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement of or in connection with any claim,
action, suit, proceeding or investigation based in whole or in
part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of Andrew or
any of its subsidiaries, and pertaining to any matter existing
or occurring, at or prior to the completion of the merger,
whether asserted or claimed in connection with the approval of
the merger agreement and the transactions contemplated thereby,
to the same extent that such persons are indemnified or have the
right to advancement of expenses as of the date of the merger
agreement.
The merger agreement also provides that for six years after the
completion of the merger, ADC will maintain directors and
officers liability insurance for acts or omissions
occurring at or prior to the completion of the merger, covering
each person who was, as of the date of the merger agreement,
covered by Andrews directors and officers
liability insurance, on terms no less favorable than those in
effect as of the date of the merger agreement. ADCs
obligation to provide this insurance coverage is subject to a
cap of 250% of the
77
amount of premiums paid by Andrew in its last full fiscal year
for its existing insurance coverage. If ADC cannot maintain the
existing or equivalent insurance coverage without exceeding the
250% cap, ADC is required to maintain only that amount of
insurance coverage that can be obtained by paying an annual
premium equal to the 250% cap.
Director Separation Agreement. The Chairman of
Andrews board of directors, Charles R. Nicholas, has an
agreement with Andrew under which Mr. Nicholas will be
entitled to a payment of $250,000 for each of the two years
immediately following his retirement from the board.
Regulatory
Approvals Required for the Merger
To consummate the merger, ADC and Andrew must make filings with
and obtain approvals or clearances from antitrust regulatory
authorities. Transactions such as the merger are subject to
review by the Department of Justice and the Federal Trade
Commission in the United States, by certain countries located in
the European Union, and by other countries to determine whether
they comply with applicable antitrust laws. Under the provisions
of the HSR Act, the merger may not be consummated until the
specified waiting period requirements of the HSR Act have been
satisfied. On June 13, 2006, ADC and Andrew filed a
Notification and Report Form pursuant to the HSR Act with the
U.S. Department of Justice and the U.S. Federal Trade
Commission. In the United States, ADC must also comply with
applicable federal and state securities laws and the rules and
regulations of Nasdaq in connection with the issuance of shares
of ADC Andrew common stock in the merger and the filing of this
joint proxy statement/prospectus with the SEC.
Restrictions
on Sales of Shares to be Received in the Merger
The issuance of shares of ADC Andrew common stock to be received
by Andrew stockholders in the merger will be registered under
the Securities Act and, except as described in this section, may
be freely traded without restriction. ADCs registration
statement on
Form S-4,
of which this joint proxy statement/prospectus forms a part,
does not cover the resale of shares of ADC Andrew common stock
to be received in connection with the merger by persons who are
deemed to be affiliates of Andrew on the date of the
Andrew special meeting. The shares of ADC Andrew common stock to
be issued in the merger and received by persons who are deemed
to be affiliates of Andrew on the date of the Andrew
special meeting of stockholders may be resold by them only in
transactions permitted by the resale provisions of Rule 145
under the Securities Act or otherwise permitted under the
Securities Act. Persons who are deemed to be
affiliates of Andrew prior to the merger include
individuals or entities that control, are controlled by, or are
under common control with Andrew on the date of the Andrew
special meeting, and may include officers and directors, as well
as principal stockholders, of Andrew on the date of the Andrew
special meeting. Affiliates of Andrew will be notified
separately of their affiliate status.
Listing
of ADC Andrew Common Stock
The shares of ADC Andrew common stock to be issued in the merger
and the shares of ADC Andrew common stock to be reserved for
issuance in connection with the outstanding Andrew options,
warrants, and restricted stock units assumed by ADC Andrew in
the merger and upon conversion of the Andrew notes are required
to be approved for listing on the Nasdaq Global Market.
Dissenters
or Appraisal Rights
Holders of ADC common stock are not entitled to dissenters
rights under the Minnesota Business Corporations Act in
connection with the issuance of ADC Andrew common stock in the
merger. Holders of Andrew common stock are not entitled to
appraisal rights under the Delaware General Corporation Law in
connection with the merger.
Anticipated
Accounting Treatment of the Merger
The merger will be accounted for using the purchase method of
accounting pursuant to Statement of Financial Accounting
Standards No. 141, Business Combinations. Under the
purchase method of accounting,
78
the total estimated purchase price is allocated to the net
tangible and intangible assets of Andrew acquired in connection
with the merger, based on their estimated fair values. These
allocations will be based upon a valuation that has not yet been
finalized.
ADC
Andrew Board of Directors
The board of directors of ADC Andrew will initially consist of
12 members. ADCs directors are currently divided into, and
ADC Andrews directors will be divided into, three classes.
The members of each class are elected to serve three-year terms,
with the term of office of each class ending in successive
years. In connection with the merger, four members of ADCs
board of directors (James C. Castle, Ph.D., John E.
Rehfeld, Jean-Pierre Rosso and John D. Wunsch) will resign
effective as of the effective time of the merger. The election
of four members of the Andrew board of directors effective as of
the effective time of the merger is an integral part of the
merger. By approving ADC Proposal No. 1, and assuming
the merger closes, ADC shareowners, will be electing the
following four members of the Andrew board of directors to fill
the vacancies on the ADC Andrew board created by the
resignations of the departing ADC directors:
|
|
|
|
|
Gerald A. Poch, for a term expiring at ADC Andrews 2008
annual meeting of shareowners;
|
|
|
|
Anne F. Pollack, for a term expiring at ADC Andrews 2008
annual meeting of shareowners;
|
|
|
|
Glen O. Toney, for a term expiring at ADC Andrews 2009
annual meeting of shareowners; and
|
|
|
|
Andrea L. Zopp, for a term expiring at ADC Andrews 2009
annual meeting of shareowners.
|
Gerald A. Poch, age 59, has been a Managing Director of Pequot
Capital Management, Inc. and Senior Managing Director of the
Pequot Capital Management, Inc. venture and private equity funds
since 1998. He was previously the Chairman, President and CEO of
GE Capital Information Technology Solutions, a technology
solutions provider, from 1996 to 1998. Prior to that,
Mr. Poch was Co-Founder, Co-Chairman and Co-President of
AmeriData Technologies, Inc., a value added reseller, systems
integrator and consulting firm for computer hardware and
software systems. Mr. Poch serves on the boards of
directors of Analex Corp. and MTM Technologies, Inc., as well as
numerous private companies. Funds managed by Pequot owned less
than one percent of ADCs outstanding common stock as of
June 15, 2006.
Anne F. Pollack, age 50, was Senior Vice President and
Chief Investment Officer of New York Life Insurance Company,
from January 2002 to June 2006. In January 2001, she was named
Senior Vice President and Deputy Chief Investment Officer of New
York Life, while also Chief Investment Officer of New York Life
International, a position she held since 1998. She joined New
York Life in 1980 and has held a series of increasingly
responsible positions in the investment and financial management
divisions. She also serves on the Boards of the Community
Preservation Corporation and Coro New York Leadership Center, as
well as the Boards of several New York Life affiliates.
Glen O. Toney, age 67, retired in 2002 as Group Vice President,
Corporate Affairs of Applied Materials, Inc., the leading
worldwide supplier of semiconductor wafer fabrication equipment.
Prior to that date, he was Group Vice President and Vice
President, Global Human Resources since 1985. He first joined
Applied Materials, Inc. in 1979. Dr. Toney serves on the
boards of directors of Authernative, Inc. and Northern
California Natural History Museum. Dr. Toney is also a
member of the advisory board of the School of Engineering and
Computer Science, the School of Natural Science and of the
University Presidents Advisory Board at California State
University at Chico.
Andrea L. Zopp, age 49, was Senior Vice President and General
Counsel of Sears Holdings Corporation from July 2003 to October
2005. Prior to joining Sears Holding, Ms. Zopp was Vice
President and Deputy General Counsel of Sara Lee Corporation
from January 2000 to July 2003. She was a partner at the law
firm of Sonnenschein, Nath & Rosenthal from January
1997 to December 1999 and previously was a prosecutor with the
Cook County States Attorney Office, serving as First
Deputy States Attorney from April 1991 to November 1996.
Ms. Zopp serves as a Trustee of the National Urban League,
the Chicago Area Project and the Heartland Alliance.
79
The four Andrew directors will join eight members of ADCs
board of directors to form ADC Andrews board of
directors. The eight continuing directors are:
|
|
|
|
|
John A. Blanchard III, age 63, serving a term expiring
at ADC Andrews 2009 annual meeting of shareowners;
|
|
|
|
John J. Boyle III, age 59, serving a term expiring at
ADC Andrews 2007 annual meeting of shareowners;
|
|
|
|
Mickey P. Foret, age 60, serving a term expiring at ADC
Andrews 2008 annual meeting of shareowners;
|
|
|
|
J. Kevin Gilligan, age 51, serving a term expiring at ADC
Andrews 2008 annual meeting of shareowners;
|
|
|
|
Lois M. Martin, age 43, serving a term expiring at ADC
Andrews 2009 annual meeting of shareowners;
|
|
|
|
William R. Spivey, Ph.D., age 59, serving a term
expiring at ADC Andrews 2007 annual meeting of shareowners;
|
|
|
|
Robert E. Switz, age 59, serving a term expiring at ADC
Andrews 2007 annual meeting of shareowners; and
|
|
|
|
Larry W. Wangberg, age 64, serving a term expiring at ADC
Andrews 2007 annual meeting of shareowners.
|
For information regarding the members of the ADC board of
directors who will continue as directors of ADC Andrew, please
see the proxy statement for ADCs Annual Shareowner Meeting
held on March 7, 2006. Please see the section entitled
Where You Can Find More Information of this joint
proxy statement/prospectus for information about how to obtain a
copy of ADCs proxy statement for the 2006 Annual
Shareowner Meeting.
80
THE
MERGER AGREEMENT
The following is a summary of the material terms of the merger
agreement. This summary does not purport to describe all of the
terms of the merger agreement and is qualified by reference to
the complete merger agreement which is included as Annex A
to this joint proxy statement/prospectus and incorporated by
reference herein. All shareholders of Andrew and ADC are urged
to read the entire merger agreement carefully.
The merger agreement has been included to provide shareholders
with information regarding its terms and we recommend that
shareholders read the entire merger agreement carefully. Except
for its status as the contractual document that establishes and
governs the legal relations among the parties with respect to
the merger, ADC and Andrew do not intend for its text to be a
source of factual, business or operational information about ADC
or Andrew. That kind of information can be found elsewhere in
this joint proxy statement/prospectus and in the documents
incorporated herein by reference. The merger agreement contains
representations and warranties of the parties as of specific
dates and may have been used for the purposes of allocating risk
between the parties other than establishing matters as facts.
Those representations and warranties are qualified in several
important respects, which you should consider as you read them
in the merger agreement, including contractual standards of
materiality that may be different from what may be viewed as
material to shareholders. Except for the parties themselves,
under the terms of the merger agreement only certain other
specifically identified persons are third party beneficiaries of
the merger agreement who may enforce it and rely on its terms.
Except for Andrew stockholders, who are third party
beneficiaries of Article II only of the merger agreement
regarding the exchange of shares in the merger, as shareholders,
you are not third party beneficiaries of the merger agreement
and therefore may not directly enforce or rely upon its terms
and conditions. You should not rely on its representations,
warranties or covenants as characterizations of the actual state
of facts or condition of ADC, Andrew or any of their respective
affiliates. Information concerning the subject matter of the
representations and warranties may have changed since the date
of the merger agreement and subsequently developed or new
information qualifying a representation or warranty may have
been included in this proxy statement/prospectus.
General
Under the merger agreement, Hazeltine Merger Sub, Inc., a wholly
owned subsidiary of ADC, will merge with and into Andrew, with
Andrew continuing as the surviving corporation. As a result of
the merger, Andrew will become a wholly owned subsidiary of ADC.
Consideration
to Be Received in the Merger
The merger agreement provides that, at the completion of the
merger, each share of Andrew common stock issued and outstanding
immediately prior to the completion of the merger, but excluding
shares of Andrew common stock held in the treasury of Andrew,
will be converted into the right to receive 0.57 shares of
ADC Andrew common stock. The merger agreement provides that this
exchange ratio shall be adjusted in the event of certain changes
to the capital stock of either Andrew or ADC prior to the
merger, such as stock splits, reorganizations, reclassifications
and other similar changes. After the merger, ADC shareowners
will continue to hold the shares of ADC common stock that they
own immediately before the merger. See
Treatment of Stock Options and Restricted
Stock Units in this section for a description of the
treatment of stock options to purchase Andrew common stock,
shares of Andrew common stock issued with restrictions or
limitations on transfer and restricted stock units of Andrew
issued under the Andrew stock plans.
Exchange
of Shares in the Merger
Before the closing of the merger, ADC will engage Computershare
to act as exchange agent and to handle the exchange of shares of
Andrew common stock for shares of ADC Andrew common stock, which
will be issued in uncertificated book entry form. Promptly after
the closing of the merger, the exchange agent will send a letter
of transmittal to each former Andrew stockholder explaining the
procedure for surrendering shares of Andrew common stock in
exchange for ADC Andrew shares, which will be issued in
uncertificated
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book entry form, representing the number of shares of ADC Andrew
common stock into which the shares of Andrew common stock were
converted in the merger.
After the completion of the merger, each certificate that
previously represented shares of Andrew common stock will only
represent the right to receive the shares of ADC Andrew common
stock into which those shares of Andrew common stock have been
converted and any cash in lieu of fractional ADC Andrew shares.
In addition, after the completion of the merger, Andrew will not
register any transfers of the shares of Andrew common stock. ADC
shareowners need not exchange their stock certificates in
connection with the merger.
Fractional
Shares
No fractional shares of ADC Andrew common stock will be issued
in the merger. Instead, the exchange agent will pay each of
those stockholders who would have otherwise been entitled to a
fractional share of ADC Andrew common stock an amount in cash
determined by multiplying the fractional share interest by the
average closing price, as reported on the Nasdaq Global Market,
of one share of ADC common stock for the ten most recent trading
days preceding the date of completion of the merger.
Listing
of Common Stock of ADC Andrew
ADC has agreed to use all reasonable best efforts to cause the
shares of ADC Andrew common stock to be issued in the merger and
the shares of ADC Andrew common stock to be reserved for
issuance with respect to stock options and restricted stock
units issued under the Andrew stock plans, upon exercise of the
Andrew warrant and upon conversion of the Andrew notes to be
authorized for listing on the Nasdaq Global Market, subject to
official notice of issuance, in connection with the completion
of the merger.
Treatment
of Stock Options and Restricted Stock Units
Each outstanding and unexercised option to purchase shares of
Andrew common stock granted under the Andrew stock plans will be
assumed by ADC and converted into an option to purchase shares
of common stock of ADC Andrew, with the number of shares of
common stock of ADC Andrew underlying the new option equaling
the number of shares of Andrew common stock for which the
corresponding Andrew option was exercisable, multiplied by the
exchange ratio (rounded down to the nearest whole share). The
per share exercise price of each new option will equal the
exercise price of the corresponding Andrew option divided by the
exchange ratio (rounded up to the nearest cent). Pursuant to the
terms of the Andrew stock plans, each outstanding and
unexercised option to purchase shares of Andrew common stock
granted under the Andrew stock plans will become fully vested
and exercisable upon consummation of the merger.
Each of the restricted stock units granted under the Andrew
stock plans will be converted into the right to receive the
number of shares of ADC Andrew common stock equaling the number
of shares of Andrew common stock relating to a restricted stock
unit immediately prior to the effective time of the merger
multiplied by the exchange ratio (rounded down to the nearest
whole share). Pursuant to the terms of the Andrew stock plans,
at the effective time of the merger, restricted stock units
granted under the Andrew stock plans will vest and all
restrictions on the Andrew restricted stock units will lapse.
Treatment
of Andrew Common Stock Issued Under Andrew Employee Stock
Purchase Plan
Andrew has terminated its employee stock purchase plan. Each
share of Andrew common stock issued under the Andrew employee
stock purchase plan with restrictions or limitations on transfer
will be converted into 0.57 shares of ADC Andrew common
stock. At the effective time of the merger, all restrictions on
Andrew common stock issued pursuant to the Andrew employee stock
purchase plan shall lapse.
Treatment
of Andrew Warrant and Andrew Notes
At the effective time, the warrant, dated January 16, 2004,
to purchase 1,000,000 shares of Andrew common stock, issued
by Andrew initially to True Position Inc., which we refer to as
the Andrew warrant, will be converted into a right to purchase
the number of shares of ADC Andrew common stock equaling the
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number of shares of Andrew common stock that were issuable upon
exercise of the Andrew warrant multiplied by the exchange ratio
(rounded down to the nearest whole share). The per share
exercise price for the shares of ADC Andrew common stock
issuable upon exercise of the Andrew warrant will equal the
exercise price per share of the warrant divided by the exchange
ratio (rounded up to the nearest cent).
At the effective time, all of the issued and outstanding
31/4% convertible
subordinated notes due 2013 issued by Andrew, which we refer to
as the Andrew notes, will continue to have and be subject to,
the same terms and conditions set forth in the indenture
governing the Andrew notes except that the notes will no longer
be convertible into Andrew common stock and will become
convertible into a number of shares of ADC Andrew common stock
equaling (i) the number of shares of Andrew common stock
into which the Andrew notes were convertible immediately prior
to the effective time of the merger, multiplied by (ii) the
exchange ratio (rounded down to the nearest whole share). See
The Merger Conditions to Completion of
the Merger for a discussion regarding the amendment of the
indenture to which the Andrew notes are subject.
Covenants
Each of Andrew and ADC has undertaken certain covenants in the
merger agreement restricting the conduct of its respective
business between the date the merger agreement was signed and
the completion of the merger. Some of these covenants are
complicated and not easily summarized. You are urged to read
carefully the section of the merger agreement entitled
Conduct of Business. The following summarizes the
more significant of these covenants:
Conduct
of Business
Except as expressly required by, or provided for, in the merger
agreement, or agreed to by the other party in writing, each of
ADC, Andrew and each of their respective subsidiaries is
required to carry on its business in the ordinary course,
consistent with past practice and use commercially reasonable
efforts to (i) preserve its current business organization,
(ii) keep available the services of its current officers
and key employees and (iii) preserve its relationships with
its customers, suppliers and other persons with which it has
significant business relations.
Required
Consent
Without the prior written consent of the other party, and with
certain exceptions and subject to certain conditions described
in the merger agreement (which exceptions and conditions apply
to certain but not all of the following items), none of ADC,
Andrew or any of their respective subsidiaries may take any of
the following actions or authorize, commit or agree to take any
of the following actions:
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Declare, set aside or pay any dividends on, make any other
distributions in respect of, or enter into any agreement with
respect to the voting of, any of its capital stock;
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Split, combine or reclassify any of its capital stock or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock;
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Purchase, redeem or acquire any shares of its capital stock or
any other of its securities or any rights, warrants or options
to acquire any such shares or other securities;
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Issue, grant, sell, deliver, pledge or otherwise encumber or
subject to any lien, any shares of capital stock or other voting
securities or any rights, warrants or options, warrants or
convertible notes, to acquire such shares or securities, other
than (A) the issuance of common stock or options upon the
exercise of Andrew or ADC options or the Andrew warrant, or
conversion of the Andrew notes or the ADC notes, (B) the
issuance by a wholly-owned subsidiary of ADC or Andrew, as
applicable, of capital stock to such subsidiarys parent
company or (C) the issuance of common stock, options to
purchase common stock or restricted stock units in the ordinary
course of business to participants in employee stock purchase
plans;
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Amend its certificate of incorporation or by-laws;
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Acquire, or agree to acquire, by merging or consolidating with,
or by purchasing any equity interest or a security convertible
into or exchangeable for any equity interest in or a portion of
the assets of, any person or business which is not an affiliate
and that would be material to the acquiror other than
acquisitions permitted by the merger agreement;
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Sell, pledge, dispose of, transfer, lease, license or otherwise
encumber any property or assets, except certain sales in the
ordinary course of business consistent with past practice;
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Make any loans, advances or capital contributions to, or
investments in, any person or entity other than certain
transactions permitted by the merger agreement;
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Borrow money or issue any debt securities or assume, guarantee,
endorse or become responsible for the debt obligations of any
person or entity, other than in the ordinary course of business;
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Draw on existing credit facilities, other than in the ordinary
course of business;
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Pay, discharge, settle or satisfy any material claim, action or
proceeding, except settlements in the ordinary course of
business or for which reserves have been established as of the
date of the merger agreement;
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Make any material tax election, except in the ordinary course of
business;
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Increase in any manner the compensation or fringe benefits of
(or enter into any commitment to pay any pension or benefit to),
or pay any bonus to, any of its officers, directors or
employees, except pursuant to existing commitments;
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Enter into any collective bargaining agreement;
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Commit itself to, or enter into, any employment agreement with
its chief executive officer, any executive who directly reports
to its chief executive officer or any executive who reports to a
direct report of its chief executive officer;
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Adopt any new benefit, compensation stock option plan, or amend,
supplement or accelerate any existing benefit, stock option or
compensation plan, except pursuant to existing commitments or as
required by applicable laws;
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Change accounting methods, principles or practices unless
required by GAAP or any applicable laws with the concurrence of
its independent auditors;
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Enter into, modify or amend in any material respect, or
terminate, waive, release or assign any material benefit or
claim under, any material joint venture, strategic partnership,
alliance, license or sublicense or other material contract,
except for certain transactions permitted by the merger
agreement;
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Enter into any new material line of business;
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Subject itself to any material non-compete or other similar
restriction on the conduct of its business that would be binding
on its business following completion of the merger; or
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Make or agree to make any new capital expenditures, other than
certain expenditures set forth in the merger agreement.
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No
Solicitation
Each of Andrew and ADC has agreed that, except in certain
circumstances, Andrew and ADC and their respective subsidiaries
will not, nor will either company authorize or permit any of its
officers, directors, employees, financial advisors, attorneys,
accountants or other representatives to, take any of the
following actions:
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Solicit, initiate, encourage or take any other action intended
to facilitate, induce or encourage any inquiries or the making,
submission or announcement of any proposal or offer that
constitutes, or could reasonably be expected to lead to, a
proposed alternative transaction (as defined below);
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Participate in any discussions or negotiations regarding, or
furnish any information with respect to, a proposed alternative
transaction;
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Approve, endorse or recommend any alternative
transaction; or
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Enter into any letter of intent, agreement or commitment
contemplating or otherwise relating to any proposed alternative
transaction.
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The merger agreement also provides that each party will as
promptly as practicable advise the other of the status and terms
of any alternative transaction proposal or any inquiry or
request for information relating to any alternative transaction
proposal and the status and terms of any such discussions or
negotiations. Each of Andrew and ADC shall also notify the other
of any meeting of the board of directors of such party at which
any alternative transaction proposal is reasonably likely to be
considered.
An alternative transaction includes, with respect to
any party, with certain exceptions, any liquidation or
dissolution of such party, or any transaction or series of
related transactions with one or more third parties involving
any one or more of the following:
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Any purchase from such party or acquisition by any person or
entity or group of more than 20% of the total
outstanding voting securities of such party;
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Any tender offer or exchange offer that, if consummated, would
result in any person, entity or group beneficially owning 20% or
more of the total outstanding voting securities of such party;
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Any merger, consolidation, business combination or similar
transaction involving such party, as a whole; or
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Any sale, lease, exchange, transfer, license, acquisition or
disposition of more than 20% of the assets of such party,
including equity securities of any subsidiary of such party, on
a consolidated basis.
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Each of Andrew and ADC, in response to an unsolicited, bona fide
proposal for an alternative transaction that is determined in
accordance with the merger agreement by such partys board
of directors to constitute a superior proposal (as
defined below), may (i) furnish its nonpublic information
to a person proposing such superior proposal and
(ii) participate in discussions or negotiations with such
person regarding such superior proposal if all of the following
conditions are met:
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Such partys board of directors has determined in good
faith, after consultation with outside legal counsel, that
failure to take such action is reasonably likely to result in a
breach of its fiduciary obligations;
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Such party has given the other party three business days
prior written notice of its intentions to engage in negotiations
and of the identity or the person, entity or group making such
superior proposal and the material terms and conditions of such
superior proposal;
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Such party has not breached in any material respect the
provisions in the merger agreement prohibiting solicitation of
competing bids;
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Before furnishing nonpublic information to the person proposing
the superior proposal, such party enters into a confidentiality
agreement with the person proposing the superior
proposal; and
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Such party provides a copy of any materials provided to the
person proposing the superior proposal to the counterparty to
the merger agreement.
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A superior proposal, with respect to a party, means
any unsolicited, bona fide written proposal made by a third
party to acquire, directly or indirectly, pursuant to a tender
offer, exchange offer, merger, consolidation or other business
combination:
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(i) 50% or more of the assets of such party on a
consolidated basis or (ii) 50% or more of the outstanding
voting securities of such party and as a result of which the
shareholders of such party immediately preceding such
transaction would hold less than 50% of the aggregate equity
interests in the surviving or resulting entity of such
transaction; and
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On terms that such partys board of directors has in good
faith, following consultation with outside legal and financial
advisors, and after taking into account all of the terms and
conditions of such proposal and the merger agreement (including
any proposal by either party to amend the terms of the merger
agreement), determined (i) to be more favorable to its
shareholders (in their capacities as shareholders) and
(ii) to be reasonably capable of being consummated on the
terms proposed, taking into account all other legal, financial,
regulatory and other aspects of such proposed alternative
transaction and the person proposing such alternative
transaction.
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In response to the receipt of an unsolicited proposed
alternative transaction that is determined to be a superior
proposal, the board of directors of the party receiving such
proposal may withhold, withdraw, amend or modify its
recommendation in favor of, in the case of Andrew, of the merger
agreement and, in the case of ADC, the shares to be issued by
ADC Andrew in the merger and, in the case of a tender or
exchange offer made directly to shareholders, may recommend that
the shareholders accept the tender or exchange offer, which we
refer to as a change of recommendation if such
partys board of directors believes in good faith, after
consultation with outside legal counsel that, in light of such
superior proposal, failure to change its recommendation is
reasonably likely to result in a breach of its fiduciary
obligations.
A party effecting a change in recommendation must:
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Provide the other party three business days prior written
notice (i) expressly stating such partys intent to
effect a change of recommendation and (ii) describing any
modifications to the material terms and conditions of the
superior proposal and the identity of the person, entity or
group making the superior proposal from the description in the
notice provided to the other party upon receipt of the superior
proposal;
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Make available to the other party a copy of any materials made
available to the person or entity proposing the superior
proposal; and
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During such three-day period, if requested by the other party,
engage in good faith negotiations to amend the merger agreement
in such a manner that the alternative transaction proposal is no
longer a superior proposal.
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In addition to the circumstances described above in which ADC or
Andrew may effect a change of recommendation, ADC or Andrew may
effect a change of recommendation if (a) a material adverse
change, as defined in the merger agreement, relating to Andrew
or ADC, as the case may be, occurs or (b) any other event
occurs which ADCs or Andrews board of directors
believes in the good faith, after consultation with outside
legal counsel, that, in light of such event, failure to effect a
change in recommendation would violate its fiduciary obligations.
No alternative transaction or change of recommendation will
limit or otherwise affect the obligation of ADC or Andrew to
convene their special meetings in connection with the merger
that is the subject of this joint proxy statement/prospectus and
neither ADC nor Andrew shall submit to the vote of its
respective shareholders any alternative transaction, whether or
not a superior proposal has been received by it, or propose to
do so at any such special meeting.
Expenses
Subject to limited exceptions, all fees and expenses incurred in
connection with the merger agreement will be paid by the party
incurring such expenses. However, ADC and Andrew will share
equally all fees and expenses, other than attorneys fees,
incurred in connection with the filing by the parties of the
premerger notification and report forms relating to the merger
under the HSR Act and any foreign antitrust or competition laws.