Cabletron Systems on Monday said it will acquire VPN (virtual private network) provider Indus River Networks for one of its four networking companies.
Enterasys Networks, Cabletron's enterprise networking unit, will gain Indus River's VPN technology for approximately $US170 million in stock, according to a Cabletron statement. Enterasys Network president Henry Fiallo said the company's clients are seeking low-cost, secure and private networks, and Indus River will assist in providing them with that technology.
Indus River was founded in 1996 and offers hardware and software technology that provides secure links across the Internet between remote workers and their corporate network. The workers' computers contain software that allows them to find the local ISP (Internet service provider) wherever they may be working. Then the connection between the remote worker and the corporate network is encrypted.
Fiallo said that merger talks between Enterasys and Indus River were held for more than a year. John Roese, Enterasys chief technology officer, said the company currently sees only several million dollars in VPN sales. But Fiallo and Roese said the acquisition of Indus River should bolster the company's VPN offerings and aid the company in tapping into a market expected to grow very rapidly in the coming years.
Indus River is privately held and has approximately 60 employees. Per Suneby, Indus River's president and chief executive officer, said the company started shipping its product in the first quarter of 1999. The company has approximately three dozen customers, he said.
According to the companies, Cabletron will pay 4.1 million shares of its stock and stock convertible into approximately 1 per cent of Enterasys Networks' fully diluted stock. Enterasys and Indus River's boards of directors have approved the acquisition, and the transaction is expected to close by the end of November.
Enterasys Networks was founded in February 2000 and has about 2300 employees. The company focuses on multilayer switching, switch routing, wireless technologies, convergence, enterprise management and the VPN market.
Cabletron in February split itself into four companies. Those include:
-- Riverstone Networks in California, which focuses on the Internet service provider market;-- GlobalNetwork Technology Services in New Hampshire, which provides network and systems consulting;-- Aprisma Management Systems in New Hampshire, which develops network management software; and-- Enterasys Networks, which serves enterprise network users.