ADC to buy Centrigram for $200 million

ADC (Nasdaq: ADCT) said Friday it will buy Centigram Communications (Nasdaq: CGRM) for $200 million to enhance its delivery of voice, text and multimedia over mobile phones, PCs and other devices.

Shares in ADC, a communications software maker, were up 1/2 to 77 Friday.

Centigram, a global provider of communications services, was up 2 3/4 to 24 3/4, or 13 percent.

The cash acquisition has a fixed purchase price of approximately $200 million, and will be accounted for using the purchase method.

ADC expects to take a one-time charge for purchased in-process research and development expense, but said it has not yet determined the amount.

Excluding the one-time charge, ADC expects the acquisition to be non-dilutive to its earnings per share in the first 12 months after closing and to add to earnings thereafter.

The company said that, in addition to adding critical mass to ADC's current software offerings, Centigram will give it a strong international worldwide customer base and a highly skilled employees.

Due to the fixed purchase price, the per share amount of the acquisition will be determined when the deal closes. Based on the number of outstanding shares and stock options as of May 26, the purchase will include about $163 million in cash to Centigram stockholders, or about $26.38 per share, and about $36 million to be paid in ADC stock through the conversion of Centigram's employee stock options to ADC stock options.

This marks the fourth communications software acquisition by ADC in the last 4 years. It has also bought Metrica Systems (1996), NewNet (1997) and Saville Systems (1999).

The company also bought Pairgain for its digital subscriber line (DSL) networking systems in February.

ADC expects to close this transaction during the next 2 to 3 months.

The company's top competitors include Lucent (NYSE: LU) and Scientific-Atlanta (NYSE: SFA), according to Hoover's Online.