Networking duo seal $3.7bn deal
The acquisition of Cascade sees Ascend restructure into four divisions and dump the Cascade name
Ascend Communications has signed a definitive agreement with Cascasde in a deal worth $3.7 billion. The agreement marks a further tightening of consolidation in the networking market.
The acquisition will give remote networking system vendor Ascend Cascade?s Frame Relay and ATM technology so the combined operation will be able to offer both ends of the system. The deal will be accounted for by a stock share where each share of Cascade?s common stock will be swapped for 0.7 of an Ascend share.
Ascend UK country manager Phil Holcroft said that the company?s channel policy would not be determined until the completion of the deal in about three months time.
Ascend sold its products via distributors, using Azlan, Data Connectivity and Unity, as well selling direct to about 10 major corporates and large internet service providers. Cascade ? which generates only 17 per cent of its sales outside of the US ? sold direct.
?What we need to do, and what we will be doing, is to look at the product ranges. We know there is some overlap, but they are largely complementary. We don?t really expect to have to do a lot of rationalisation,? said Holcroft.
The buyout came as Cascade expected a 35 per cent increase in turnover and profit for the quarter ended 29 March, compared with the same period last year. Both companies will announce their financial results on 10 April.
As a result of the purchase, Ascend chief executive Mory Ejabat will remain as president and CEO, while Cascade?s Gururaj Deshpande will become an executive vice president of strategic planning. Cascade chief executive Dan Smith will become executive vice president of the core switching systems business unit.
Ascend will be restructured into four divisions ? multimedia access products, remote products, access and concentrator products, and core switching systems. The combined operation will retain the Ascend name instead of Cascade.