March 4, 1999
Dow Jones Newswires
Siemens AG Plans U.S. Data Market Venture - N.Y. Times
Dow Jones Newswires
NEW YORK -- Siemens AG of Germany is about to expand into the fast-growing data
networking business by forming a new American subsidiary, acquiring two private
companies in the United States, investing in a third and hiring a senior executive from
IBM, executives close to the company's planning said Wednesday, The New York
Times reported in its Thursday edition.
Siemens is also in preliminary discussions with 3Com Corp. about paying $1.2 billion
for the 3Com unit that sells networking equipment to telephone companies, the
executives said.
Siemens plans to announce on Monday that it has agreed to acquire Castle Networks
Inc., a private data networking company based in Westford, Mass., for about $300
million in cash, and Argon Networks Inc., a private data networking company based in
Littleton, Mass., for about $240 million in cash, the executives said. Siemens will also
announce an agreement to acquire a $30 million stake in Accelerated Networks Inc., a
private company based in Moorpark, Calif.
The acquisitions will be folded into a new Siemens venture to be based in Boston, the
executives said. While the internal code name of the project has been Siemens.com, the
new unit may be the first Siemens venture not to include the Siemens name.
Siemens is close to a deal to hire Martin Clague, general manager for global network
computing solutions at IBM Corp., to become chief executive of the new venture, the
executives said.
Siemens, Castle, Argon, Accelerated and Clague declined to comment.
According to The New York Times, executives close to Siemens said the board of the
new company would include Clague; Fred Fromm, chief executive of Siemens'
American operations; Thomas Rambold, president of Siemens' current data networking
group; Dan Smith, chief executive of Sycamore Networks Inc. and former chief
executive of Cascade Communications, and George Conrades, former chairman of
BBN Corp.
According to executives close to Siemens' plan, the company has set aside about 3
billion marks, or $1.7 billion, to invest in its new venture. The company is considering
folding its existing operations in the United States into the venture and selling stock in the
subsidiary later this year, the executives said, adding that a final decision on those two
possibilities had not been made. A public stock offering could serve Siemens' interests
by giving it a currency, in the form of an American stock, to make more acquisitions.
Any deal with 3Com, however, would probably be for cash. 3Com has struggled
recently as it tries to manage different businesses: a unit that sells advanced equipment to
phone companies, a unit that sells network cards for personal computers to computer
makers, a unit that sells modems to consumers and a business selling the popular Palm
Pilot hand-held computer.
According to executives close to the talks, 3Com recently asked Newbridge Networks
of Canada, another company that makes data networking equipment, if it would be
interested in acquiring the 3Com unit that sells equipment to big phone companies. But
Newbridge declined.
Newbridge has its own alliance with Siemens, but executives close to Siemens said the
relationship was in tatters and that the deals Siemens would announce Monday would
make clear that the partnership with Newbridge is in trouble.
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