SAN FRANCISCO (06/13/2000) - Looking to strengthen its position in the wireless market, Xircom Inc. announced today that it plans to acquire Omnipoint Technologies Inc. (OTI) for approximately US$52 million in stock.
Xircom, which makes network access devices including computer modems, said the acquisition will enhance its wireless offerings by adding WAN (wide area network), GSM (global system for mobile communications) and GPRS (general packet radio services) products and technologies to its portfolio.
By combining its products with OTI's technologies, Xircom plans to deliver products that use GPRS, an emerging high-speed wireless standard, that will provide wireless data access from mobile devices such as notebook computers and handheld PCs, the company said.
GPRS works in conjunction with GSM voice networks, and can deliver a constant connection as long as a device is powered on, eliminating the need to continually redial a modem. Users can be charged by the amount of data downloaded rather than by standard time-based billing, Xircom said.
OTI is a wholly-owned subsidiary of VoiceStream Wireless Corp. The deal has been approved by the boards of directors of VoiceStream and Xircom, and is expected to close within three weeks subject to the approval of federal regulators, Xircom said.
Under the terms of the agreement, VoiceStream will become a minority investor in Xircom by holding 1.2 million shares of Xircom common stock, which will be exchanged for all outstanding shares of OTI. Based on Xircom's Monday closing price on the financial markets, the stock exchange would have a value of $52.2 million, the companies said.
In addition, Xircom will assume certain liabilities, and unvested employee stock options with a value of approximately $8.3 million as of June 9, 2000, Xircom said.
The acquisition will be accounted for as a purchase, and Xircom expects to incur a related charge to earnings of between $15 million and $25 million during the financial quarter due to close June 30, 2000.
Robert Stapleton, VoiceStream's president and director, will take a seat on Xircom's board of directors.
Xircom, in Thousand Oaks, California, can be reached at 1-805-376-9300 or at http://www.xircom.com/. VoiceStream, based in Bellevue, Washington, can be reached at http://www.voicestream.com/.