Naperville-based Tellabs Inc. will start a new chapter when new owners take over the company later this year and take it private.
The telecommunications equipment maker said Monday it will be acquired by Marlin Equity Partners for about $891 million in cash. What happens to the company, the sprawling Naperville campus, and the remaining workforce is still unknown until after Los Angeles-based Marlin Equity closes the deal.
In the meantime, Tellabs plans to continue its restructuring. Tellabs is in the process of trimming about 300 jobs from its workforce, which was about 2,175 employees in June. It's part of a restructuring plan to discontinue a line of routers as the company struggles to turn a profit. The company had about 8,900 workers in its heyday,
"When that's behind us, we'll continue to focus on innovations to help our customers succeed," said Tellabs spokesman George Stenitzer.
For "multiple months" the Tellabs board of directors looked at strategic alternatives, which included contacting more than 30 potential buyers and financial sponsors "to ascertain their interest in acquiring Tellabs," Stenitzer said.
Tellabs co-founder and its second-largest stockholder, Michael J. Birck of Hinsdale, who retired as chairman on May 1, did not play a role in the negotiations. But Birck told the board that he supported the transaction, Stenitzer said.
Dan Kelly is expected to continue as the Tellabs CEO, Stenitzer said.
"Marlin had indicated an interest in Tellabs based on the strong strategic fit with their telecom portfolio, and we were subsequently contacted by Goldman Sachs during the strategic process initiated by the board of Tellabs," Stenitzer said.
Marlin Equity, which has an office in London, is a global investment firm with more than $2.6 billion of capital under management. Marlin Equity, through its group of funds and related companies, has completed more than 65 acquisitions.
The sale marks the end of an era for the legendary technology company.
Co-founder Birck retired as chairman and is battling chronic myelomonocytic leukemia, an uncommon form of bone marrow cancer. He began his career at AT&T's Bell Laboratories and Continental Telephone Laboratories before joining Wescom Inc. in 1968, where he was a director of engineering.
His life changed in 1974 during a barbecue at his Hinsdale home. That's when he and Martin Hambel, a Wescom colleague, casually talked about forming a new company to use emerging technologies expected to replace transistors. They were operational amplifiers, the building blocks in exchanges that would transmit more than data.
By early 1975, they had enlisted C. Fred Weeks Jr., Charles "Chris" Cooney, Ron Sproull and John Santucci. They decided to go into business together, despite a recession.
To fund the startup, Birck sold all his AT&T stock and used his home as collateral for a $50,000 loan from Citizens Bank of Downers Grove. Hambel and Weeks each sold their homes. Sproull's mother loaned them $20,000.
In 1975, the men raised $110,000 and created Tellabs inside a rented, 3,000-square-foot office on Indiana Avenue in Lisle.
The men made a five-year commitment and forfeited salaries that first year. They often gathered whatever resources they could to design telecommunications equipment. In some cases, they even received donated parts and Birck designed some devices. They were latching onto RCA, Western Union and others in the growing satellite communications field, developing equipment to help with signaling and transmission.
By the end of its first year, Tellabs had 20 employees, $312,000 in sales, and a $47,000 loss.
By 1980, Tellabs went public. Three years later, a second offering was made.
By the fourth quarter of 2000, the telecom's earnings were the best ever, and it become a $3 billion international giant.
At that time, Tellabs paid $13 million for 50 acres on Diehl Road in Naperville and spent nearly $115 million to build its North American headquarters.
Tellabs was growing rapidly and Birck decided to split his chairman and CEO position. In September 2000, he relinquished his CEO title to Richard Notebaert, a former Ameritech Corp. chief. Birck retained his chairman seat.
By 2000, business was robust, Birck said.
By early 2001, the thrill ride was over. Tellabs' customers, including MCI WorldCom, stopped pushing out orders and had a backlog. Two acquisitions also turned out to be mistakes. At the same time, Tellabs had 8,900 employees and began lay offs. Over the next two years, that global workforce was reduced to 4,035.
Then Notebaert left to join head Qwest Communications in 2000. Birck was on a Purdue-sponsored European cruise with his wife and learned of Notebaert's resignation via email. Birck left the cruise ship in Helsinki and immediately flew home, unexpectedly returning to the CEO helm.
Birck stepped down as CEO a second time when Krish Prabhu joined the company in 2004. Prabhu, now president and CEO of AT&T Labs Inc. Birck returned again to the helm but later tapped Rob Pullen as CEO. However, Pulled died of colon cancer in 2012 and was replaced by Dan Kelly, who remains in that position.
•Daily Herald wire services contributed to this report.