CIENA to Swallow ONI in Stock Deal
By Karen Brown -- Multichannel News, 2/19/2002 8:56:00 AM
Optical-equipment provider CIENA Corp. is expanding its business with a deal to acquire ONI Systems, a metro optical-gear provider, in a stock deal valued at $900 million.
San Jose, Calif.-based ONI gives Linthicum, Md.-based CIENA a foothold in the metro optical-networking market.
The companies are projecting $55 million to $65 million in annual operating-expense savings, with $1.3 billion in cash net of debt.
Under the deal, each outstanding share of ONI common stock will be exchanged for 0.7104 shares of CIENA common, representing approximately 24 percent ownership of the combined company.
'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,' CIENA president and CEO Gary Smith said in a release.
'With this acquisition, CIENA dramatically expands its metropolitan presence,' he added. '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.'
CIENA and ONI board members have approved the transaction, which still must gain stockholders' and federal regulators' approval. The deal is expected to close in the second or third quarter of this year.
Once complete, the combined company would retain the CIENA name and have headquarters in Linthicum.
ONI chairman, president and CEO Hugh Martin will stay on to complete the transition, but he is not expected to take a position at the merged company. ONI cofounder and chief technology officer Rohit Sharma will become senior vice president and CTO.
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