Dynatech money move benefits TTC

Dynatech Corp., a publicly traded company, announced that it will recapitalize itself as a 95% private company with the help of a $277 million equity infusion from Clayton, Dubilier & Rice Inc., a private investment firm.

The move will unlock the company and its subsidiaries-especially its largest unit, test equipment vendor Telecommunications Techniques Corp.-from the constricting expectations of the stock market. The resulting strategic flexibility and financial freedom will let Dynatech and TTC more easily pursue important acquisitions and emerging product trends.

"We'll be able to maximize our ability to grow and not see our stock get beat up if we lose a little money in the process," said John Peeler, president and CEO of TTC.

Acquisition-related debt and frequent product strategy adjustments can hurt a company's stock price, which can quickly dampen a company's willingness to pursue acquisitions or strategy shifts. So now is not the time for a company such as TTC to be dragging the stock market's ball and chain behind it. "It's a good time for us to have more flexibility. There is a lot of opportunity out there for us," said Peeler.

In recent years, the test equipment market has been marked by software-driven instrumentation and the rise in centralized network monitoring capabilities. Traditional test companies have been quick to reposition themselves to take advantage of these trends. For instance, TTC announced a partnership in 1997 with Clear Communications, developer of a widely deployed centralized management solution.

The Germantown, Md.-based company also recently christened a new systems and software division focused on delivering solutions for carrier network operations centers.

The recapitalization plan will leave CDR with a 70% stake in Dynatech, with the remaining 25% held by 300 Dynatech management employees. "It's significant that this plan was initiated by Dynatech management. It is not a CDR takeover," said Peeler.