Nortel Networks to Acquire Alteon WebSystems for US$7.8 Billion - Will Establish
Leadership Position in Delivering High-Performance Internet Data Centers for the New
Networked Economy
Internet Data Centers "Come Together" with Optical Internet, Wireless
Internet and eBusiness to Create High-Performance, Content-Aware Networks
BOSTON, July 28 /CNW/ - Nortel Networks (NYSE/TSE: NT) announced a
definitive agreement whereby Nortel Networks will acquire San Jose, Calif.-
based Alteon WebSystems, Inc. (NASDAQ: ATON), the leader in content aware
switching, positioning Nortel Networks as the leader in delivering high-
performance Internet data centers. Nortel Networks will pay an estimated
US$7.8 billion in its common shares for Alteon WebSystems on a fully diluted
treasury stock basis.
The acquisition will enable Nortel Networks to build the next generation
Internet data center - capable of delivering content at unprecedented levels
of speed, efficiency and reliability. Nortel Networks will be in a position to
offer a complete Internet data center solution by integrating Alteon
WebSystems' content aware switching products with Nortel Networks' service
offerings in storage, gigabit switches, professional services, hosted
application management/delivery and caching.
The acquisition will also give Nortel Networks first-mover advantage in
integrating Internet data centers with the high-performance optical and 3G
wireless Internet delivering unparalleled, edge-to-edge broadband solutions.
"In the new economy, the value and richness of content across the
Internet is increasing on a massive scale," said Clarence Chandran, Chief
Operating Officer, Nortel Networks. "Our acquisition of Alteon WebSystems will
accelerate the delivery of an Internet data center capable of moving content
seamlessly and rapidly across high-performance optical Internet and 3G
wireless networks."
With its massively distributed architecture, robust software
capabilities, marquee customer base, deep market penetration and dramatic
revenue growth, Alteon WebSystems is the leader in the expanding market for
content switching - forecast by International Data Corporation (IDC) to grow
to more than US$4 billion by 2004 from US$203 million in 1999. Alteon
WebSystems leverages this opportunity with innovative content switching
technology that enables companies to process, track and intelligently direct
Web sessions at gigabit rates while applying sophisticated traffic control
services to each session.
"Alteon WebSystems and Nortel Networks share a common vision of high
performance content delivery services that exploit the high-performance
Internet and create new profit opportunities for service providers," said
Dominic Orr, president and Chief Executive Officer, Alteon WebSystems, Inc.
"The possibilities of integrating our intelligent content switching with
Nortel Networks' optical networking and 3G wireless Internet technologies are
limitless."
Alteon WebSystems, the market share leader in Layer 4-7 Web switching
market according to the Dell'Oro Group, posted revenue of US$51.5 million for
the quarter ending June 30, 2000 - an increase of 82 percent from the previous
quarter. Based on worldwide revenue, Dell'Oro estimates that Alteon WebSystems
holds 50 percent of the global content aware switching market in Layer 4-7
switching, and 81 percent of the gigabit Ethernet segment.
Alteon WebSystems' customer base includes first-movers in the enterprise
and leading-edge service provider markets including Yahoo!, Excite@Home,
Buy.com, NTT, DLJDirect, CitySearch-Ticketmaster Online, Exodus
Communications, Loudcloud, Digex, ISPs UUNet, Cable & Wireless, Virgin, Global
Crossing, ICG Communications, GTE Internet, Concentric Networks and Microsoft
WebTV.
Upon completion of the transaction, Alteon WebSystems will become a
wholly owned subsidiary of Nortel Networks. Alteon WebSystems will continue to
be headquartered in San Jose, California. President and CEO Dominic Orr will
become the president of Nortel Networks' Content Distribution Networks
business unit.
Under terms of the agreement, Alteon WebSystems shareholders will receive
a fixed exchange ratio of 1.83148 Nortel Networks common shares for each share
of Alteon WebSystems common stock. Based on the closing price of US$78.625 per
common share of Nortel Networks on Thursday, July 27, 2000, this represents a
price of US$144 per share of Alteon WebSystems and a price of US$7.8 billion
for the common shares of Alteon WebSystems on a fully diluted treasury stock
basis. The acquisition (excluding acquisition related costs) is expected to be
neutral in calendar year 2000 and slightly accretive in calendar year 2001 to
Nortel Networks earnings per share from operations.
The transaction, which is expected to close in the fourth quarter of
2000, is structured to be tax-free to Alteon WebSystems' United States
shareholders.
The boards of directors of both companies have approved the transaction.
The completion of the transaction is subject to customary regulatory approvals
and the approval of Alteon WebSystems shareholders.
Credit Suisse First Boston Technology Group acted as financial advisor to
Nortel Networks for this transaction and Lehman Brothers represented Alteon
Web Systems.
Alteon WebSystems pioneered the concept of Web switching and is a leading
provider of next generation Internet infrastructure solutions designed to
enable eBusinesses to meet the demands resulting from the rapid growth of the
Internet. The company's Web data center products including Web switches,
server adapters and traffic management software are optimized to meet the
specific challenges of managing Web traffic and provide the high performance
and availability of leading networking infrastructure solutions. Founded in
May of 1996, Alteon WebSystems employs a staff of approximately 500 around the
world and is publicly traded on the Nasdaq Stock Market under the symbol
"ATON."
Nortel Networks is a global Internet and communications leader with
capabilities spanning Optical, Wireless, Local Internet and eBusiness. The
Company had 1999 U.S. GAAP revenues of US$21.3 billion and serves carrier,
service provider and enterprise customers globally. Today, Nortel Networks is
creating a high-performance Internet that is more reliable and faster than
ever before. It is redefining the economics and quality of networking and the
Internet, promising a new era of collaboration, communications and commerce.
Visit us at www.nortelnetworks.com. |
