More: Nortel to buy Bay Networks for $9.1 billion
Associated Press - Posted at 9:13 a.m. PDT Monday, June 15, 1998
TORONTO -- Canadian telecommunications giant Northern Telecom
Ltd. is acquiring California-based Bay Networks in a deal worth $9.1
billion.
The deal, one of the biggest in North America's telecommunications
industry, will create a company designed to deliver revamped Internet
network systems around the world.
John Roth, president and chief executive of Northern Telcom, will
remain chief executive of the new company, according to Monday's
announcement by the companies. Dave House, chairman, chief
executive and president of Bay Networks, will become president of
Nortel.
Once the merger is complete, Bay Networks will operate as a wholly
owned subsidiary of Nortel. Bay Networks shareholders will get 0.6
Nortel common shares for every share of the acquired company they
hold, which Nortel said represents $38.21 per Bay share.
''The Web has changed everything,'' House said. ''The public network
is moving rapidly from voice to data. A new class of company must
emerge to meet the demand for (Internet) technology and networking
expertise.''
Nortel, controlled by Bell Canada parent BCE Inc., is Canada's largest
telecommunications company with 73,000 employees around the world
and revenues of about $15 billion last year.
Bay Networks, based in Santa Clara, Calif., is a leader in the
worldwide networking market, serving corporations, service providers
and telecommunications carriers.
Roth told Nortel's annual meeting in April that huge growth is straining
the resources of the global computer network and Nortel wants to cash
in on the booming demand for secure systems.
Nortel has been on an acquisition binge and is shifting money and
workers into Internet projects, including its so-called Webtone system,
which is promoted as providing reliable, high-speed, secure multimedia
access to the Internet.
Already this year Nortel has paid $716 million to acquire two
companies -- Broadband Networks Inc. of Winnipeg, Canada, and
Aptis Communications Inc. of Boston -- that will help it develop
Webtone.
About 3,000 of Nortel's 18,000 research workers are working on
improving Internet networks.
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