Lucent Technologies Acquires Spring Tide Networks for $1.3 Billion

Strategic Insights -

Lucent Technologies has announced that it will acquire Spring Tide Networks, a leader in network switching equipment, for approximately $1.3 billion in stock. The acquisition will give Lucent a leadership position in the IP services market and enable the company to offer a broad portfolio of Internet Protocol (IP) services to its customers. Spring Tide's equipment delivers up to four times the scalability and performance of competing products, and its control plane architecture radically improves service provisioning and delivery. The acquisition is expected to be completed by September 30, 2000.

Key Takeaways:

  • Lucent Technologies will acquire Spring Tide Networks for approximately $1.3 billion in stock, with the company owning approximately 96% of Spring Tide.
  • The acquisition will give Lucent a leadership position in the IP services market and enable the company to offer a broad portfolio of IP services to its customers.
  • Spring Tide's equipment delivers up to four times the scalability and performance of competing products.
  • The company's control plane architecture radically improves service provisioning and delivery, enabling carriers to offer "follow-me" services across any access media in the network on a massive scale.
  • Spring Tide's flagship product, the IP Service Switch 5000, delivers value-added, business-quality, IP services like virtual private networks (VPNs), managed firewalls, voice and multimedia services.
  • The acquisition is expected to be completed by September 30, 2000.
  • Lucent expects the acquisition to result in a one-time charge against earnings for an accounting write-off assigned to in-process research and development.
  • The acquisition is expected to dilute Lucent's pro forma earnings per share for continuing operations by about one cent in fiscal 2001.
  • Spring Tide's president and CEO, Allan Wallack, will stay on with Lucent, as will the company's founder and CTO, Steven Akers, and its founder and VP of business development, Stephen Collins.

Statistics:

  • The acquisition price is approximately $1.3 billion in stock.
  • Lucent will own approximately 96% of Spring Tide Networks.
  • Spring Tide's equipment delivers up to four times the scalability and performance of competing products.
  • The IP Service Switch 5000 has the industry-leading processing capacity to route tens of thousands of users simultaneously.
  • The public IP services equipment market is expected to increase from $660 million to $1.6 billion over the next year, and exceed $5 billion by 2003.

Sources:

  • "Lucent Technologies to Acquire Spring Tide Networks for Approximately $1.3 Billion." Canada NewsWire, Toronto.
  • "About Lucent Technologies." Lucent Technologies, Murray Hill, NJ, USA.
  • "About Spring Tide Networks." Spring Tide Networks, Maynard, MA, USA.
  • "Ryan Hankin Kent, a leading analyst firm."