Broadband Net Suppliers in Acquisition Deals

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A pair of broadband Internet-service suppliers announcedacquisitions earlier this month aimed at adding to their service offerings.

Hybrid Networks Inc., which makes telco-return cable modemsand related headend equipment, said March 19 that it agreed to buy Pacific MonolithicsInc. in a stock deal valued at $12.5 million plus $5 million in assumed debt. Pacific, ofSunnyvale, Calif., had $35.3 million in revenue in the fiscal year that ended Sept. 28. Itmakes wireless broadband-receiving equipment, and Hybrid has aimed much of its marketingefforts at wireless cable MSOs.

The deal will be accounted for as a pooling of interests,and the companies expect it to close by midyear, after regulators and both companies'shareholders approve. Hybrid will take a one-time charge at the time of closing againstthe companies' combined earnings, reflecting merger costs. After closing, CarlLedbetter will continue as chairman and CEO of Hybrid, and Pacific president Richard Goldwill become Hybrid's president and chief operating officer.

Meanwhile, Online System Services Inc., a turnkey broadbandInternet-service provider, also announced March 19 a deal to buy Durand CommunicationsInc. of Santa Barbara, Calif., for about 1 million shares, or some $9.9 million in OSSstock.

The acquisition is subject to approval by shareholders ofOSS and other contingencies.

Durand provides an integrated suite of products andservices for building and supporting online communities and electronic commerce. OSSpresident Steve Adams said in a prepared statement that the deal should "enhance ourability to provide critical local content and online-community development to broadbandoperators that are offering high-speed Internet access to their subscribers."

Privately held Durand is strong in online education andbusiness training, through its ownership of Pangaea Network and the Electronic UniversityNetwork, Adams said.

OSS also recently announced plans to sell asecondary offering of $15 million to $20 million in common stock, probably thissummer.