British electronics and communications giant General Electric (GEC) has agreed to purchase Fore Systems in a $US4.5 billion cash deal, company officials announced on Monday.
A US subsidiary of GEC, Acquisition, will offer $35 per share for Fore Systems by April 30, according to the merger agreement.
The acquisition will enable GEC to enhance its Marconi Communications call centre, which will be integrated with Fore System's ATM (Asynchronous Transfer Mode) and IP (Internet protocol) switching, said George Simpson, GEC' s chief executive officer, said.
GEC plans to merge Acquisition and Fore Systems into a subsidiary, to be called Fore Systems, which will offer a wide range of products and technologies that are scaled to suit companies, company officials said.
The combined company will provide users with integrated high-speed data, voice and video services, said Thomas Gill, president and chief executive officer of Fore Systems.
The Fore Systems' acquisition will also provide GEC Group with a stronger US presence and access to the enterprise data networking market, GEC officials said.
Fore Systems, a global supplier of Internet switching equipment, generated revenues of $632 million in the year ended March 31.
The deal comes hot on the heels of an industry rumour that Ericsson was about to buy Fore Systems -- a rumour that Ericsson moved to quash (see ComputerWorld Today April 7, 1999).
Alex Turkington, regional director, South Asia, Fore Systems, said he was not surprised by Monday's announcement, given the trend towards consolidation in the networking market.
"There have been a lot of rumours circulating recently" he said.
He said that there was very little product overlap between the two companies and that Fore Systems offered GEC access to new markets.
It was difficult to assess the impact of the deal for Fore Systems' Australian operations at this stage, Turkington said.
At present Fore Systems plans to continue building its new office facility and technical assistance centre in Sydney, he said.
He did not envisage that redundancies would result from the takeover.