Newbridge Networks is poised to take over Ethernet switch company OST in a deal due to be completed by July 18.
Sources close to both companies said a memorandum to merge had been signed and only legal details remained to be resolved. It is unclear whether the acquisition is a cash or stock swap deal and what sum is involved.
The deal stems from Newbridge's interest in OST's Xcellys range of ATM-based Ethernet switches and, more importantly, the difficulty it has had breaking into the French market, where OST is based.
A source close to Newbridge said the fate of OST in France had been decided.
'It will join with Newbridge Networks France to become Newbridge Networks SA,' he said.
'What will happen to OST in the rest of the world is less clear, and will be decided by July 18. I believe that they will leave OST UK to their own devices, as it's a far more complicated situation than in France.
Here OST has a well-developed channel, but Newbridge has limited channel experience.'
Lionel Hovsepian, MD of Newbridge Networks France, will become MD of Newbridge Networks SA, his staff growing from around 18 to 400. Thao Lane, owner and CEO of OST will become chairman.
Both OST in France and Newbridge Networks in the UK refused to comment on the deal. Hovsepian was slightly more revealing. 'It is not true yet,' he said.
'We have a very strong technical relationship with OST, but nothing is finalised regarding a takeover - if indeed there is a takeover.'
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