Lucent to buy Nexabit to boost IP offerings

Telecommunications equipment giant Lucent Technologies last week announced it is strengthening its product line for the Internet with a $US900 million acquisition of privately held Nexabit Networks.

Nexabit makes switching and routing equipment for IP (Internet protocol) wide area networks. Lucent said its acquisition of the company is expected to close by July 31. The Nexabit purchase is part of Lucent's ongoing effort to come up with products that can be sold to carriers and service providers that are making more use of Internet technology to carry voice and data traffic, according to a Lucent statement.

Lucent is offering 14 million shares of its own common stock for Nexabit, which based on Lucent's closing price last Thursday makes the transaction worth about $900 million. One of closely held Nexabit's investors is Vulcan Ventures, founded by Microsoft co-founder Paul Allen.

The acquisition will be accounted for on a pooling-of-interest basis and is not expected to affect Lucent earnings this year or next, Lucent said.

The two companies started working together prior to the decision to merge. A development agreement currently underway calls for the incorporation of Lucent's DWDM (dense wavelength division multiplexing) technology into Nexabit equipment. When completed, the work will let Nexabit products switch IP traffic directly onto high-bandwidth optical network infrastructure, according to Lucent.

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