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Lucent Technologies To Merge With Ascend Communications, A Global Leader In Data Networking
Creates world's broadest networking portfolio for service providers
MURRAY HILL, N.J. - In its boldest move yet to address high-growth opportunities in data networking, Lucent Technologies today announced that it has signed a definitive agreement to merge with Ascend Communications. Under terms of the agreement, which was approved by each company's board of directors, each share of Ascend will be converted into 0.825 shares of Lucent. Based on yesterday's Lucent stock closing price of $107-7/8, the transaction would be valued at about $20 billion.
The transaction is expected to be completed during Lucent's third fiscal quarter, which ends June 30, 1999, and will be accounted for as a pooling of interests. Lucent expects the merger to be neutral to earnings in fiscal 1999 and accretive beginning in fiscal 2000, the first full year of combined operation.
"This merger positions Lucent to be a clear leader in communications networking and will have a significant, positive impact on enhancing shareholder value," said Rich McGinn, chairman and chief executive officer of Lucent Technologies. "Virtually every major service provider worldwide is making decisions on how to engineer and deploy its new or evolving network for data, voice, fax and video services," McGinn continued. "On the short list of companies that service providers want to work with, Lucent and Ascend together will lead the pack. This merger makes our portfolio broader and more powerful, and gives us the edge as we develop the next generation of networks."
Based in Alameda, Calif., Ascend Communications is a leading provider of wide area network (WAN) core switching and access data networking equipment for telecommunications carriers, Internet service providers, corporations and government users worldwide.
"As successful as Ascend is as a stand-alone company, this merger takes us to a higher level," said Mory Ejabat, Ascend president and chief executive officer. "Lucent enables us to give customers a more robust, end-to-end solution, and it complements Ascend's market-leading technology. The merger will give our people the chance to join an industry leader that has been driving change across the full range of communications networking technologies.
"This deal is a perfect fit," added Ejabat. "Lucent and Ascend already have a strong track record of smoothly teaming together on customer opportunities, and the Ascend ATM Core Switch is already a critical component of Lucent's data networking portfolio."
Broadband Networks Group formed
Concurrent with the merger, Lucent is establishing a Broadband Networks Group to be led by Dan Stanzione, Lucent's chief operating officer and group president. The new group will consist of the Ascend organization and Lucent's Data Networking Systems, Optical Networking and Communications Software groups. This new unit will be focused on delivering broadband, multiservice networks. Bell Labs will continue to report to Stanzione.
Ascend's CEO Mory Ejabat will stay with Lucent for a transition period to assure a successful integration of the businesses.
"You have to be able to deliver a total communications networking capability to be successful with demanding service provider customers who operate large, complex networks that simply cannot break," Stanzione said. "That means a company not only has to be a leader in data networking, but also must be capable of delivering optical networking, software and services solutions all working seamlessly together. Lucent - together with Ascend - will be the company best suited to deliver such a total communications networking solution.
"While we're adding powerful new technology in this merger, the most important piece is the addition of Ascend's talent," said Stanzione. "No one understands the challenges of integrating voice, data, video and fax services better than the Lucent and Ascend teams. With the backing of Bell Labs and the outstanding Ascend people, we will be the architects and builders of a new generation of networks."
Founded in 1989, Ascend Communications is a global leader in building carrier and ISP networks, providing enterprise connections to these public networks, and in providing enterprise WANs. Today, the majority of leading carriers offer Internet access using Ascend equipment. Industry researchers rate Ascend as No. 1 in providing remote access, frame relay and ATM equipment to carriers worldwide.
The company's blue-chip customer base includes AT&T, Bell Atlantic, GTE, Level3, MCI/Worldcom, PSINet, Qwest, Sprint, Williams and Winstar; and internationally, BT, Deutsche Telekom, France Telecom, NTT, Telecom Italia and TelMex. The merger is subject to approval by Ascend shareholders as well as other customary legal requirements.
Merger builds on Lucent data networking strategy
In the last two years, Lucent Technologies has taken a number of steps to address its data networking opportunity: the acquisition of 11 companies in strategic data networking technologies; the internal development of an enhanced portfolio of intelligent switching, access and network management products, with more than 30 new products introduced in 1998 alone; and a number of strategic partnerships and agreements addressing sales and distribution channels.
As a part of its data networking portfolio, Lucent also offers professional support services capabilities through its NetCare(R) Data Services, including a broad set of consulting, integration, management and maintenance services for multivendor data and video networks, voice systems and networks, and call centers.
For more information on Ascend, browse the company's home page at ascend.com.
Lucent Technologies designs, builds and delivers a wide range of public and private networks, communications systems and software, business telephone systems and microelectronics components. Bell Labs is the research and development arm for the company. More information about Lucent Technologies, headquartered in Murray Hill, N.J., is available on its web site at lucent.com.
This news release contains forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. These risks and uncertainties include future stock market returns, price and product competition, dependence on new product development, reliance on major customers, readiness for Year 2000, control of costs and expenses, international growth, general industry and market conditions and growth rates and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations. For a further list and description of such risks and uncertainties, see the reports filed by Lucent with the Securities and Exchange Commission. Lucent disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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