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Krishnan Thiagarajan

SHAREHOLDERS may reject the open offer of Krone Communications being made by ADC Telecommunications Inc., US. The open offer price of Rs 92 is unattractive as it is significantly lower than the current market price of Rs 130.

ADC Telecommunications Inc (ADC) is making an offer to acquire a 23 per cent equity stake in Krone, pursuant to its acquisition of GenTek Holding Corporation, which indirectly holds a 51 per cent equity stake in Krone.

Krone Communications is involved in the manufacture of telecom and networking equipment. Krone has maintained its market share in the switching segment catering to BSNL and expects to make headway among the private sector operators such as Reliance Infocomm. In structured cabling solution, it has broad-based its product portfolio.

As India is emerging as a major player in the telecom field, ADC may increase its financial commitment to Krone in the coming years. Krone's association with ADC is also likely to expand its product range in the wireline and wireless space, opening up newer opportunities for growth.

ADC's range of products and services cover every type of communication network from copper, fibre, coaxial and wireless media. These help offer high-speed Internet, data, video or voice services to consumer and businesses worldwide.

In the absence of any firm commitments for integration and launch of the expanded product range by ADC and the growing competition in the domestic telecom products and services space, any significant improvement in earnings will take time to materialise. Yet, remaining invested may be the better option.

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