Yes, too cheap.
Ciena says to buy ONI Systems for $900 mln in stock
NEW YORK, Feb 18 (Reuters) - Optical networking firm Ciena Corp <CIEN.O> said on Monday it had agreed to acquire ONI Systems Corp <ONIS.O> for $900 million in stock in order to bolster its presence in metropolitan optical networking markets.
Each share of ONI common stock will be exchanged for 0.7104 shares of Ciena common stock, leaving ONI shareholders with a stake of about 24 percent in the newly combined company.
The acquisition is expected to "accelerate Ciena's return to profitability," said Ciena President and Chief Executive Gary Smith.
Ciena, hurt by drastic cutbacks in telecommunications spending, on Feb. 5 said it expected to post a wider-than-expected first-quarter loss, and announced job cuts totaling about 12 percent of its work force.
ONI specializes in optical networking equipment for metropolitan markets, which are expected to experience higher demand than long-distance networks as the economy recovers.
Ciena said it expects cost savings of $55 million to $65 million annually from the acquisition, and that the combined company would have about $1.3 billion in cash debt as of January, 2002.
Under terms of the deal, which is expected to close during the second or third quarter of 2002, ONI Chairman, President and CEO Hugh Martin is not expected to remain with the company in the long term, Ciena said in a statement.
With U.S. markets closed for the Presidents Day holiday, shares of ONI were trading higher in Europe on Monday, at $6 from a close of $5.54 on the Nasdaq Friday. Ciena shares in Europe were trading at $8.60, from Friday's close of $8.73.
07:47 02-18-02 |
