ADC announces agreement to acquire the Krone Group

ADC (

) today announced an agreement to acquire the KRONE Group, a leading global supplier of copper- and fibre-based connectivity solutions and cabling products used in public access and enterprise networks by many of the world`s leading organisations, from GenTek Inc.

"This is an ideal acquisition and a perfect fit with ADC`s new strategic initiative to become the leader in global network infrastructure solutions and services," said Robert E Switz, president and CEO of ADC. "This is the first major step we are taking to fulfil the growth plans we outlined over the last several months. With the addition of KRONE, we further establish ADC as a leader in network infrastructure, a core strength area where we have a proven record of success. Ultimately, our customers benefit from this combination."

Through the combination of ADC and KRONE product lines, people and facilities, ADC will quickly achieve a larger global scale and presence in supplying global network infrastructure solutions, including:

* Worldwide market leadership in copper and fibre central office infrastructure technology;

* Diversified global customer base serving nearly every major communications service provider worldwide;

* Leading market share in the enterprise structured cabling systems market via KRONE`s advanced products;

* Accelerated entry into the emerging growth markets of China, India, Russia, Eastern Europe and Southeast Asia;

* Broader product portfolio with a worldwide opportunity to cross-sell and up-sell existing and upcoming products; and

* Competitive cost leadership through global manufacturing, engineering and supply chain management.

"ADC`s new Global Network Infrastructure strategy includes the products, systems and services that provide the foundation for every type of communications network over every medium: fibre, copper, coaxial and wireless," Switz said. "The intent of our strategy is to enable all of our customers -- wireline, wireless, cable, broadcast and enterprise -- to profitably deploy every type of broadband service offering and application. For example, KRONE and ADC Ethernet infrastructure products will provide unmatched solutions for voice-over-IP and Gigabit Ethernet networks. In addition, with approximately 70% of ADC sales in North America and approximately 80% of KRONE sales outside of North America, this acquisition truly creates global scale with local presence to serve all our customers. We are proud to join forces with a talented KRONE workforce to drive significant and sustainable value from the combination of our companies."

The proposed acquisition is valued at approximately $350 million in which ADC will pay cash of approximately $291 million and assume certain defined liabilities consisting principally of KRONE`s pension obligation for its German workforce. The transaction is expected to close during ADC`s third quarter ending 31 July 2004. Closing of the transaction is subject to approval by necessary regulatory authorities as well as customary closing conditions. After closing the transaction, ADC expects to take a charge for various acquisition-related expenses the amount of which has not been determined. Excluding the charge and amortisation of acquisition-related intangibles, ADC expects the acquisition to be accretive to earnings per share in 2004. Booz Allen Hamilton has been retained by ADC to assist in integrating the two companies toward ADC`s expectation of driving significant and sustainable value from this combination.

"KRONE and its employees are pleased to join ADC in forming a global single source for global network infrastructure solutions for every conceivable network type," said Ron Lowy, president and COO of KRONE. "The ADC and KRONE combination allows communications service providers and enterprises to avoid the hassles of dealing with multiple suppliers. With just one call, we can quickly deliver the right infrastructure solutions required in both public access and enterprise networks anywhere in the world."

KRONE is a total solutions provider, offering a complete line of copper- and fibre optic-based cabling and connectivity systems. Since its initial offering of distribution frames and cable connection hardware more than 70 years ago, KRONE`s product lines and customer base have seen significant growth. With more than 2 000 employees, eight factories and five research and development centres around the world, KRONE has representation in more than 140 countries to supply communications service providers and enterprises. Based on unaudited numbers, KRONE had sales of $316 million, operating income of $13 million before restructuring and impairment charges, and depreciation and amortization expense of $14 million in the year ended 31 December 2003 compared to 2002 annual sales of $267 million resulting in an operating loss of $10 million before restructuring and impairment charges, and depreciation and amortisation expense of $14 million.

Conference call and Webcast

ADC will discuss its acquisition of KRONE on a conference call scheduled for 25 March, at 11am Eastern time. The conference call can be accessed by domestic callers at (800) 399-7506 and by international callers at (706) 634-2489. Starting today at 2pm Eastern time, the replay of the call can be accessed until 23:59pm Eastern time on 1 April 2004 by domestic callers at (800) 642-1687 and by international callers at (706) 645-9291 (conference ID number is 6340753). The conference call and replay can also be accessed on the Internet at www.adc.com/investor, by clicking on News & Communications, then clicking on Webcasts.

Keyword: Minnesota Colorado
Industry Keyword: Telecommunications Software E-Commerce Internet Hardware Conference Calls Mergers/ACQ