Ottawa, June 22 (Bloomberg) -- Newbridge Networks Corp., a Canadian maker of networking equipment,
agreed to buy Stanford Telecommunications Inc. for as much as US$490 million in stock to broaden its line
of wireless products.
Newbridge will exchange stock valued at US$30 to US$35 for each share of Sunnyvale, California-based
Stanford. The final amount will depend on whether Stanford can sell certain assets before the close of the
acquisition, which is subject to regulatory and shareholder approval.
Buying Stanford would give Newbridge products and technology for carrying large volumes of data over
wireless networks. The companies already have a year-old development agreement for products based on
wireless technology known as LMDS, or local multipoint distribution service. ''This is something
(Newbridge) needed to get into,'' said Maribel Lopez, an analyst at Forrester Research Inc., a Cambridge,
Massachusetts-based market researcher.
Stanford had US$1.34 million in net income and US$165.4 million in sales in its fiscal year ended March
31. Newbridge said the acquisition won't cut profit from operations in the first year. It's expected to add
to earnings after that. 'Play on the Future' ''This is more of a play on the future than anything immediate,''
said Warburg Dillon Read Inc. analyst John Wilson, who rates Newbridge a ''hold.''
Newbridge said it expects to sell US$1 billion of LMDS equipment in the next three years.
The company said it will keep the 100 employees at Stanford's wireless-technology group. Stanford agreed
to sell its government-supply business, including 870 workers, and needs to raise US$210 million for
shareholders to get the US$35 maximum. Newbridge will gain those cash proceeds in the acquisition.
The number of Newbridge shares exchanged will be calculated based on a 10-day average close as of five
days before Stanford shareholders meet to vote on the acquisition. That meeting is expected in October. If
they're worth less than US$24, Stanford's board can halt the sale.
Shares of Ottawa-based Newbridge fell C$0.80 (US$0.54) to C$45 in Toronto before being halted. Stanford
rose 1/16 to 26 1/2 before it was halted.
NYSE/AMEX delayed 20 min. NASDAQ delayed 15 min.
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