In a move that will put pressure on Cisco, wide area switching specialist Cascade Communications is to acquire ATM supplier Sahara Networks, for more than $200 million dollars.
Under the terms of the agreement, announced this week, Cascade will acquire Sahara in exchange for 3.8 million shares of Cascade common stock. The transaction will be accounted for as a one-time research and development write-off and is expected to be completed by the end of this month.
The move will take Cascade, whose business is heavily focused on carriers and service providers, more deeply into customer locations. This continues the evolution of the company, which started life five years ago as a frame relay specialist, into a broad-based switch maker. This is Cascade's second major acquisition - it also bought remote access specialist, Arris Networks, last April.
The company turned over $150 million in 1996 and competes head to head with the likes of Cisco and Northern Telecom in the frame relay and ATM market place. According to Brendan Hannigan, senior analyst at Forrester Research, the acquisition will put the screws on Cisco in the Internet market.
?Cisco is very dominant in the networking business but Cascade competes strongly with it when it comes to frame relay or IP switching," he said. "This acquisition will allow Cascade to bring legacy Lan traffic into its carrier networks so that it can offer end-to-end solutions.?
?This acquisition complements our ATM product set,? said Mark Phelan, European marketing manager at Cascade. "We already provide core ATM technology inside the service providers' networks but this allows us to extend the technology out to customer locations.?
Sahara offers a variety of broadband access products and chief executive Jonathan Reeves believes the two companies share the same ?carrier-class approach to technology".
Ascend Communications, a competitor to Cascade in the carrier market for remote access, is also on the acquisition trail, announcing the takeover of remote access specialist Stonybrook.
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