Network services provider Tellabs (NASDAQ:TLAB) sealed an $891 million buyout on Monday from Marlin Equity Partners that carries a meager premium of less than 5%.
Despite the low premium, the deal has received the backing of Tellabs co-founder and major shareholder Michael Birck as well as lead activist Dialectic Capital Management.
Marlin Equity Partners agreed to pay $2.45 a share in cash for Naperville, Ill.-based Tellabs, which sells marketing equipment and services to communications-services providers.
The offer price represents a 4.3% premium on the company’s Friday close of $2.35 and a 13.3% premium over its 180-day volume-weighted average closing price.
“This transaction will deliver to Tellabs stockholders certainty of value and liquidity, immediately upon closing," Vince Tobkin, Tellabs chairman, said in a statement.
Tobkin said the buyout was reached after a “thorough review” of the company’s strategic alternative and after more than 30 potential suitors, including both strategic and financial parties, were contacted.
“We are pleased that the board has evaluated all alternatives and are choosing what they feel is the best option for all stakeholders,” Dialectic Capital Management said.
Tellabs generated 2012 revenue of $1.05 billion and employed more than 2,500 people as of June 2013.
Based in Hermosa Beach, Calif., Marlin has more than $2.6 billion of capital under management.
The Tellabs deal is expected to close in the fourth quarter of 2013 and is not subject to a financing condition.
"We are excited to back the Tellabs team and we view Tellabs' business as an ideal opportunity to capitalize on the growth in the telecom network equipment sector," said Nick Kaiser, a partner at Marlin.
Shares of Tellabs rallied 5.96% to $2.49 in Monday’s premarkets, surpassing the $2.45-a-share offer price.
Goldman Sachs (NYSE:GS) served as Tellabs’ banker on the deal, while Credit Suisse (NYSE:CS) and Evercore (NYSE:EVR) advised Marlin.