Lucent says to buy Ascend for about $20 billion
January 13, 1999 05:32 AM
NEW YORK, Jan 13 (Reuters) - Lucent Technologies Inc., the world's largest
telecommunications equipment maker, said Wednesday it would buy Ascend
Communications Inc., the fourth-largest maker of computer networking gear,
for about $20 billion in stock.
The deal would creating a strong challenger to networking leader Cisco
Systems Inc. Lucent expects the deal to be neutral to earnings in fiscal 1999
and boost earnings beginning in fiscal 2000, the first full year of combined
operation.
Lucent, which traditionally supplied voice products for telecommunications
companies, has made 11 small acquisitions to break into the data networking
market since it was spun off from AT&T Corp. in 1996. The Ascend deal is
Lucent's largest acquisition yet and its biggest move to tackle the
converging markets of voice and data networks.
Ascend's Chief Executive Mory Ejabat will stay with Lucent for a
transition period to ensure a successful integration of two companies,
Lucent said.
Concurrent with the merger, Lucent also will create a new unit, the broadband
networks group, which will consist of the Ascend organization and Lucent's data
networking systems, optical networking and communications software groups. The
unit will be led by Lucent's Chief Operating Officer Dan Stanzione, Lucent said.
The Ascend deal is expected to close during Lucent's third fiscal quarter,
which ends June 30, and will be accounted for as a pooling of interests.
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