Tellabs to be acquired by Marlin Equity Partners for $891 million in cash

Tellabs(s tlab) was once a high-flying telecom and optical networking equipment maker, cashing in on the networking boom of the late 1990s. As the boom turned to bust, so did the company’s fortunes. Monday, Tellabs announced that it was being acquired by Marlin Equity Partners of Los Angeles, Calif. for $891 Million in cash — that is less than quarterly sales it logged during the heyday of telecom.

Under the terms of the deal, Marlin will pay $2.45 a share for Tellabs (s TLAB), a 4.3 percent premium over the October 18, 2013 closing share price. Given that Tellabs had about $500 million in cash, I am guessing this deal is a lot cheaper than it seems, perhaps even a bargain.

Marlin had previously acquired the optical transport business from Nokia Solutions and Networks (NSN) and part of Sycamore and the two are now part of Marlin company, Coriant. Tellabs adds more heft to the group (with optical access products) and brings in over $800 million in revenues to the table. Of course, Tellabs still counts companies like Verizon Communications(s vz) as customers.

The company, like many high flyers of the 1990s bubble, was hit hard by two major trends. First, the lack of growth in new demand because of the turbocharged buildouts during the bubble. And second, the massive consolidation in the telecom carrier market put too much power in the hands of network operators. The emergence on Chinese players — ZTE Corp., and Huawei —  hasn’t helped matters either, and Tellabs own attempts to diversify (buying mobile core network equipment maker WiChorus, for instance) haven’t paid out. All those macro changes have reduced the company to a shell of its former self.