After Weeks of Speculation, Ciena-Tellabs Merger Is Canceled

Ciena Corp. and Tellabs Inc. have canceled plans to merge. Directors of both companies said they would not be able to gain approval for the merger from shareholders. Originally, Lisle, Ill.-based Tellabs agreed to purchase Ciena of Linthicum, Md., for $7.1 billion based on the closing price of Ciena's stock on June 2.
On Aug. 21, AT&T announced it would not test Ciena's equipment, dashing hopes of a lucrative contract and pushing share prices for both Ciena and Tellabs sharply lower. The announcement, coupled with disappointing third-quarter results for Ciena, put merger talks on hold and spurred the boards of directors of both companies to reschedule a shareholder vote for November. Yet as the share prices for Ciena and Tellabs continued to nosedive, the deal began to unravel.
News of the cancellation fueled brisk trading in both companies' stocks. The termination will not trigger breakup fees for either company.