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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: mrclinton who wrote (58695)	1/11/1999 3:01:00 PM
From: Jack Colton	Respond to of 61433

FOCUS--Lucent to buy Kenan in $1.44 bln stock deal (adds details on Ascend, stock prices; updates value of deal; pvs. MURRAY HILL, N.J.) By Jessica Hall NEW YORK, Jan 11 (Reuters) - Lucent Technologies <LU.N>, the world's largest maker of telecommunications equipment, said on Monday it would acquire Kenan Systems Corp., a privately-held provider of specialized billing software, for about $1.44 billion in stock. Separately, Lucent is also in talks to buy Ascend Communications Inc. <ASND.O>, the fourth-biggest maker of computer networking equipment, industry sources and analysts said. A deal could be valued at more than $16 billion, analysts said. Lucent and Ascend declined to comment. Since being spun off from AT&T Corp. <T.N> in 1996, Lucent has made a series of acquisitions to fill in gaps in its product mix and to bolster its presence in the data networking market. Kenan specializes in flexible billing, order processing and customer analysis software that allows telecommunications service providers to use one software program to produce a single customer bill for any combination of wireless, wireline, voice, data, Internet, and broadband cable services. Lucent said the purchase of Kenan marks its entry into the field of third-party customer billing software. A Lucent spokesman said the company previously used outside contractors to provide this service. Those contractors included Kenan. "The right billing and customer care offering is becoming a passport to selling integrated solutions," Lucent said in a prepared statement. "We weren't a player in this space, so we decided to jump to the head of the pack by acquiring the hottest player in the business." Lucent also expects the deal to help its international growth since Cambridge, Mass.-based Kenan has relationships with telecommunications companies worldwide. Murray Hill, N.J.-based Lucent said it expects the deal, which is expected to close by March 31, to increase its earnings in the first year of combined operations. Under terms of the deal, Lucent will exchange 12.88 million shares of its common stock for Kenan's total equity. The deal was initially worth $1.48 billion, based on Lucent's closing stock price on Friday. As Lucent's stock fell on Monday, down $3.25 in early trading on the New York Stock Exchange, the value of the deal fell to $1.44 billion. Lucent will account for the deal as a pooling-of-interest, its first use of such accounting treatment since it was freed in October from a two-year restriction against pooling deals. Lucent was prevented from certain types of acquisitions under terms of its separation from AT&T. Separately, Lucent is considering a potential acquisition of Ascend, a data networking company based in Alameda, Calif., industry sources and analysts said. If the long-rumored deal comes to pass, it would help Lucent tackle the converging markets of traditional voice networks and high-speed data networks, analysts said. Ascend on Monday agreed to sell certain operations and said it would divest other non-core businesses later this month. These divestitures are necessary before Ascend could forge a deal with Lucent, analysts said. Ascend said it would would sell the enterprise computer division of Stratus Computer Inc., which it bought on Oct. 19, to an investor group led by international investment bank, Investcorp <INV.BH>, which is based in Bahrain. Terms were not disclosed. When Ascend first announced plans in August to buy Stratus, it said it would shed the units that supply computer systems to banks, brokerages and other corporate clients so it could focus on supplying equipment to phone companies. Ascend said it would sell the other non-telecom units later in January. Shares of Ascend gained $2.94 to $74.375 on Nasdaq. REUTERS Rtr 14:16 01-11-99 Copyright 1999, Reuters News Service