Lucent in talks to buy Ascend - industry sources
By Jessica Hall
NEW YORK, Jan 11 (Reuters) - Telecommunications equipment maker Lucent Technologies Inc. is in talks to buy Ascend Communications Inc., a data networking company, for more than $16 billion, industry sources and analysts said on Sunday.
Lucent, headquartered in New Jersey, and California-based Ascend declined to comment.
An acquisition of Ascend would strengthen Lucent's position as it confronts the converging markets of traditional voice networks and high-speed data networks, analysts said.
The companies, long seen as potential merger partners, have been working closely together for months, but are still conducting due-diligence reviews to evaluate a potential deal, industry sources who declined to be identified said.
The companies were expected to meet on Tuesday to discuss details and an announcement of a deal could be made as early as Wednesday, although the timing could change, industry sources and analysts said.
One industry analyst said Lucent could pay more than $80 a share in stock for Ascend.
Under the deal, Lucent valued at about $151.6 billion, will take over Ascend, which has a market capitalisation of about $15.5 billion based on its stock price of $71.44 a share on the Nasdaq Stock Market on Friday. Lucent shares closed at $115.25 in New York Stock Exchange composite trade on Friday.
''They've been considering a deal for months. It was just a matter of waiting for Lucent's stock to hit a level where they could pull it off,'' one industry source said. ''It could still hit a snag if they can't find a price that is worthwhile enough for Ascend, but not too dilutive for Lucent.''
Lucent, based in Murray Hill, New Jersey, is the largest maker of equipment for telecommunications companies and has made several small acquisitions to move into the data networking business.
Lucent, spun-off from AT&T Corp. in 1996, has been widely expected to make a large acquisition since October, when it was freed from a two-year restriction that prevented it from doing acquisitions using the pooling-of-interests accounting method.
Ascend is the largest seller of networking equipment to Internet service providers and one of the top five U.S. data networking companies.
00:51 01-11-99
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