Bay Networks is likely to be bought by telecoms giant Nortel within a month in a multi-billion dollar deal, PC Week has learned.
The revelation follows weeks of speculation over a possible takeover of Bay Networks by several telecoms companies including Nortel, Lucent and Ericsson.
However, a source close to the negotiations told PC Week that Nortel would like to announce the Bay acquisition at the Supercomm 98 trade show in Atlanta in the week of 8 June. The source added that Nortel made an offer for Bay before the Net-World+Interop 98 show earlier this month.
Bay is believed to have rejected the initial bid as too low.
A source close to Bay told PC Week it would rather be bought by Nortel than anyone else, but refused to explain why.
The amount of the alleged offer is not known, but US analysts believe it is between $32 (#19.6) and $35 (#21.4) per share, or $7.3 billion (#4.5 billion) to $8 billion (#4.9 billion). Bay shares are currently trading at $26.38 (#16.18).
The company's market capital is currently $5.5 billion (#3.4 billion).
Nortel would like to grab Bay before October as this is when its telecom rival Lucent could bid for the network giant. Lucent, which was hived off from telecoms giant AT&T in 1996, would not be able to make such an acquisition until September at the earliest, three years after the AT&T break-up, analysts said.
Both firms refused to comment.
Recent acquistions include:
- Netsation, February 1998 - a company specialising in multi-vendor network management
- New Oak Communications, January 1998 - a technology leader in extranet access and VPN technology.
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