Adtran announced an agreement to acquire German telecommunications equipment vendor and rival ADVA Optical Networking in a deal valued at $931.1 million. The move is positioned at an unprecedented fiber investment cycle that is being targeted by vendors like Cisco, Nokia, Ciena, Huawei, and Infinera. 

Adtran said the deal will create an end-to-end fiber networking vendor with $1.2 billion in combined revenue and over $50 million in annual run-rate cost synergies. The all-stock transaction is valued at a 22% premium on top of ADVA's average closing stock price over the past three months. Adtran investors will own 54% and ADVA shareholders will own 46% of the combined company. Those Adtran investors did not react positively to the news, with the vendor's stock trading down more than 15% on Monday.

Adtran offers fiber access, fiber extension, and subscriber connectivity products. ADVA provides network equipment for metro wavelength division multiplexing (WDM), data center interconnect, business ethernet, and network synchronization solutions.

“We are in the early stages of an unprecedented investment cycle in fiber connectivity, especially in the U.S. and Europe, fueled by the demand for last-mile fiber access and middle-mile transport to provide high-speed connectivity to homes, businesses and future 5G infrastructure,” Adtran Chairman and CEO Thomas Stanton said in the statement. “By joining forces, our combined firm’s portfolio will better position us to capitalize on this highly compelling global opportunity.”

The combined entity will continue with the Adtran brand, with Stanton maintaining his positions. Current ADVA CEO Brian Protiva will move to an executive vice chairman role. The new board of directors will comprise nine directors, six of whom will be from Adtran.

The deal is expected to close by the end of the third quarter of 2022.