Alcatel to Acquire Xylan for US$2 Billion

Alcatel SA will buy U.S. networking vendor Xylan Corp. for nearly US$2 billion [B] to strengthen its business selling IP (Internet Protocol)-related products and services, the French communications equipment vendor announced today.

Valuing Xylan at $37 a share, Alcatel will begin a cash tender offer for the U.S. vendor by March 8. The offer will expire 20 business days after that date and is subject to shareholder and regulatory approvals, the French company said in a statement issued today. The deal is expected to close by early next month, Alcatel said.

The boards of the directors of both Alcatel and Xylan have approved the deal. Xylan directors recommended that Xylan's shareholders also approve the purchase, according to the statement.

In addition to bolstering its data switching business, Alcatel said the Xylan buyout should strengthen its presence in the managed LAN (local area network) services market and will offer the company a way into the U.S. market for networks that integrate voice and data.

Alcatel is one of the largest makers of equipment used to carry telecommunications voice traffic. The planned purchase follows the lead of several telco equipment makers that have acquired sellers of Internet-related equipment.

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