Cabletron Systems and Bay Networks have each snapped up a smaller fish for a total of over $300 million (#186 million). Cabletron has bought Yago Systems, a start-up specialising in Layer 3 switching routers. Bay Networks' acquisition is New Oak Communications, which specialises in Virtual Private Network (VPN) technology. Cabletron already owned 25% of Yago; the deal is worth $156 million (#96.9 million) now and $213 million (#132 million) in 18 months, as a result of a pledge to Yago shareholders. There were rumours of interest in Yago from Cisco, but most analysts predicted Cabletron's move. Yago's MSR technology allows switching routers for Gigabit and Fast Ethernet to handle larger volumes of data. The acquisition now gives Cabletron a foothold in Layer 3 Gigabit switching. Bay paid the same amount ($156 million) for New Oak. That firm's VPN technology enables more secure links between companies' internal networks and those of their customers. New Oak's Extranet Access Switches were among the first to combine all the technologies that enable corporates and telcos to create Extranets and VPNs.
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