Cisco Doles Out $435M For
SONET Chip Maker
(06/29/99, 6:03 p.m. ET)
By Mark LaPedus, Electronic Buyers' News
Looking to bring some key component
technology in-house, Cisco Systems, has
acquired StratumOne Communications for
$435 million in stock.
StratumOne is a Santa Clara, Calif.-based supplier of
SONET chips.
The deal -- Cisco's largest chip acquisition ever -- gives
theLAN/WAN-equipment giant access to
StratumOne's IC technology, reportedly including a
line of framer-IC products for use in cutting-edge
OC-192 (10-gigabit per second) networks, sources
said.
StratumOne and Cisco are no strangers. Earlier this
year, San Jose, Calif.-based Cisco took a small equity
stake in StratumOne, a two-year-old company that
competes in the framer-chip arena against the likes of
AMCC, Lucent, PMC-Sierra, Vitesse, and others.
Analysts said Cisco will use StratumOne's technology
for internal consumption only.
As part of the deal, StratumOne president and CEO
Vijay Parikh will report to Graeme Fraser, vice
president and general manager of Cisco's Optical
Internetworking Business Unit. No layoffs are planned
for StratumOne, which has 78 employees.
Under the terms, Cisco will exchange between 6.31
million to 7.72 million shares of its common stock for all
outstanding shares and options of StratumOne. Based
upon Cisco's June 28, 1999 closing price of 61.9375,
the stock exchanged would have a value of
approximately $435 million. This acquisition will be
accounted for as a pooling of interests and is expected
to close in the first quarter of Cisco's fiscal year 2000.
The acquisition has been approved by the board of
directors of each company and is subject to various
closing conditions, including approval under the
Hart-Scott-Rodino Antitrust Improvements.
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