Ciena buys ONI for US$900 million
- 20 February, 2002 08:29
Optical networking and switching company Ciena Corp. is to buy Oni Systems Corp. for US$900 million in stock, in an attempt to boost its presence in metropolitan optical networking and return to profitability, the companies announced Monday.
The combined companies will be able to offer end-to-end products to service providers, who have increasingly been asking for improved metropolitan services, the companies said in a statement.
The deal is expected to close in the second or third quarter of this year, with the company operating under the Ciena name and headquartered in Linthicum, Maryland, the statement said.
Ciena anticipates savings of $55 million to $65 million in "expense synergies" and further savings from manufacturing efficiencies, and expects the transaction to qualify as a tax-free reorganization, it said.
Ciena announced plans to cut 10 percent of its workforce, or 380 people, in November 2001 as a result of a US$90 million revenue drop to $367.8 million in the fourth quarter. The combined company now has about $1.3 billion of cash net of debt, as of January 2002, Monday's statement said.
The deal will involve all outstanding shares of Oni common stock being exchanged for 0.7104 shares of Ciena common stock, giving Oni shareholders a stake of about 24 percent of the combined company.
Hugh Martin, Oni's chairman, president and chief executive officer, will work with Ciena during the integration period but is not expected to remain with the company longterm, Ciena said.