Monday February 18, 3:31 am Eastern Time
Press Release
SOURCE: CIENA Corporation
CIENA and ONI Systems Agree to Unite
Best-of-Breed Optical Networking Companies to Form a New, Next-Generation Leader
LINTHICUM, Md.--(BUSINESS WIRE)--Feb. 18, 2002--CIENA®
Corporation (NASDAQ: CIEN - news) and ONI Systems(TM) (NASDAQ: ONIS - news) today
announced a definitive agreement under which the companies would
combine to form a new next-generation optical networking leader.
Under the terms of the agreement, all outstanding shares of ONI
common stock will be exchanged at the ratio of 0.7104 shares of CIENA
common stock for each share of ONI common stock, which will represent
approximately 24% ownership of the combined company. Based on the
closing price of CIENA stock on Friday, February 15, 2002, the deal is
valued at approximately $900 million.
``We're combining CIENA, the leader in core optical networking and
switching, with ONI, the leader in metropolitan optical networking, to
create a new, stronger, next-generation optical networking leader,''
said Gary Smith, CIENA's president and CEO. ``With this acquisition,
CIENA dramatically expands its metropolitan presence. We also further
improve the economics of network ownership for our customers by
enhancing our ability to offer carriers the most comprehensive,
next-generation optical networking solution.''
``This is a different kind of combination for a different kind of
market,'' continued Smith. ``Much of the rationale of this union comes
from the synergies that can be gained by CIENA and ONI joining forces. Together, we can combine our efforts, consolidate our resources and
target new market opportunities. As a result, we expect to accelerate
CIENA's return to profitability.''
CIENA expects the transaction will result in annualized operating
expense synergies of $55 to $65 million for the combined company, as
well as additional manufacturing efficiencies. It is estimated that the combined company would have approximately $1.3 billion of cash net
of debt as of January 2002.
``Combining our solutions creates the first company able to offer
service providers true end-to-end and best-of-breed solutions,'' said
Hugh Martin, chairman, president and CEO of ONI Systems. ``We believe
CIENA and ONI have complementary product sets and development efforts
and the strongest optical transport, switching and management software
teams in the industry. Through this combination we create a new
leader, unencumbered by legacy systems and with the ability to
accelerate the deployment of next-generation optical networking and
the evolution of networks from legacy infrastructures. I believe that
we will have the required technology, critical mass and vision to
become the supplier of choice for service providers worldwide.''
``Together, CIENA and ONI will be in a much better position to
effectively execute a strategy of providing distributed intelligence
all the way from the long-haul optical core of the network down to the
optical edge,'' said Mark Lutkowitz, vice president, optical networking
research of industry analyst Communications Industry Researchers.
``Service providers have increasingly been looking at the potential for
enhancing metropolitan services as an extension of the intelligence
now available at the network core. With ONI, CIENA now has
significantly set itself apart from other major equipment vendors by
having the widest portfolio of network-proven solutions currently
available, offering faster provisioning of bandwidth and driving down
operations costs over a much broader range of a carrier's network.''
Transaction Terms
CIENA expects the transaction to qualify as a tax-free
reorganization. This transaction is subject to various conditions and
approval by appropriate government agencies and the stockholders of
CIENA and ONI. The Boards of Directors of both CIENA and ONI each have
approved the transaction. The executive officers and directors of ONI,
representing approximately 11.5% of the outstanding shares of ONI,
have agreed to vote their shares in favor of the transaction at ONI's
stockholder meeting. It is expected that this transaction will close
during the second or third calendar quarter of 2002. Upon closing, the
combined company will retain the CIENA name and will be headquartered
in Linthicum, MD.
Morgan Stanley served as financial advisor to CIENA on this
transaction. Goldman Sachs served as financial advisor to ONI.
Organization
Hugh Martin, ONI's chairman, president and CEO has agreed to take
a major role to help ensure the successful integration of CIENA and
ONI's organizations and product lines. Martin is not expected to
remain with the combined company long term. Following the completion
of the transaction, CIENA's existing Metropolitan Transport and
Metropolitan Switching efforts will be combined with ONI's. Rusty
Cumpston, ONI's chief operating officer will lead the group's joint
efforts and he and Jesus Leon, currently CIENA's Senior Vice
President, Metropolitan Transport and Switching, will drive product
integration efforts. Rohit Sharma, a founder of ONI and currently its
Chief Technology Officer, will be Senior Vice President and CTO of the
newly combined Metro organization.
Live Web Broadcast
In conjunction with this announcement, CIENA and ONI will host a
discussion about this combination with investors and financial analysts on Tuesday, February 19, 2002 at 8:30 AM (Eastern). The live
broadcast of the discussion will be available via CIENA's homepage at
www.CIENA.com and on ONI's homepage at www.ONI.com. An archived
version of the discussion will be available shortly following the
conclusion of the live broadcast on the Investor Relations page of
CIENA's website at: www.CIENA.com/investors and on ONI's website at:
www.ONI.com.
ABOUT CIENA
CIENA Corporation's market-leading intelligent optical networking
systems form the core for the new era of networks and services worldwide. CIENA's LightWorks(TM) architecture enables next-generation
optical services and changes the fundamental economics of
service-provider networks by simplifying the network and reducing the
cost to operate it. Additional information about CIENA can be found at
www.CIENA.com.
ABOUT ONI
ONI Systems develops, markets and sells optical networking
equipment specifically designed to address bandwidth and service limitations of regional and metropolitan networks. Our products allow
communication service providers to rapidly build high-capacity metro
networks that are flexible, scalable and able to support multiple
services on a single platform. For additional information about ONI
and its products, visit the company Web site at www.ONI.com.
This press release includes certain ``forward-looking statements''
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The
forward-looking statements in this document include statements about
future financial and operating results and the proposed CIENA/ONI
transaction. These statements are based on our expectations and are naturally subject to uncertainty and changes in circumstances. Actual
results could vary materially from the expectations contained herein.
The following factors, among others, could cause actual results to
differ materially from those described herein: inability to obtain, or
meet conditions imposed for, governmental and other approvals for
CIENA's acquisition of ONI, including stockholder approval, the risk
that the CIENA and ONI businesses will not be integrated successfully;
the costs related to the merger; and other economic, business,
competitive and/or regulatory factors affecting CIENA's and ONI's
business generally. There can be no assurance that the contemplated
advantages will be achieved upon any consummation of the merger. More
detailed information about these and other factors is set forth in
CIENA's and ONI's filings with the Securities and Exchange Commission,
including CIENA's Annual Report filed on Form 10-K for the fiscal year
ended October 31, 2001, especially in the Management's Discussion and
Analysis section and its Current Reports on Form 8-K and ONI's Annual
Report filed on Form 10-K for the fiscal year ended December 31, 2000,
and subsequent Forms 10-Q, particularly in the Management's Discussion
and Analysis section and under Factors That May Affect Future Results,
and its Current Reports on Form 8-K. CIENA and ONI are under no
obligation to (and expressly disclaim any such obligation to) update
or alter their forward-looking statements whether as a result of new
information, future events or otherwise.
CIENA, its directors, executive officers and certain other members
of management and employees may be soliciting proxies from CIENA
stockholders. ONI, its directors, executive officers and certain other
members of management and employees may be soliciting proxies from ONI
stockholders.
INVESTORS ARE URGED TO READ THE PROXY STATEMENT - PROSPECTUS
RELATING TO THE FOREGOING TRANSACTION THAT CIENA EXPECTS TO FILE WITH
THE SEC BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. THE PROXY
STATEMENT - PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC BY CIENA
AND ONI MAY BE OBTAINED WHEN THEY BECOME AVAILABLE FOR FREE AT THE
SEC'S WEB SITE, WWW.SEC.GOV. THE PROXY STATEMENT-PROSPECTUS AND THESE
OTHER DOCUMENTS MAY ALSO BE OBTAINED FOR FREE FROM CIENA OR ONI.
REQUESTS TO CIENA MAY BE DIRECTED TO CIENA, 1201 WINTERSON RD.,
LINTHICUM, MD, 21090-2205, ATTENTION: INVESTOR RELATIONS. REQUESTS TO
ONI MAY BE DIRECTED TO 5965 SILVER CREEK VALLEY ROAD, SAN JOSE, CA
95138, ATTENTION: INVESTOR RELATIONS. |
