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Telecommunications equipment industry

Lucent Technologies Acquires Yurie Systems in $1 Billion Deal

Strategic Insights

— 1 min read

Lucent Technologies Inc. has agreed to pay $1 billion for Yurie Systems Inc., a fast-growing maker of telecommunications equipment based in Landover. The deal caps a period of rapid expansion for Yurie, which has seen its sales soar from $1 million in 1994 to $51 million last year. The acquisition will bring Yurie's technology, which speeds data across phone lines more efficiently, under Lucent's data networking business.

Key Takeaways:

  • Lucent Technologies Inc. has agreed to pay $1 billion for Yurie Systems Inc., a maker of telecommunications equipment based in Landover.
  • Yurie's stock jumped $3.75 a share to close at $34.75 on the Nasdaq after Lucent announced it would pay $35 a share for the company.
  • Yurie's sales have grown from $1 million in 1994 to $51 million last year, with the company expanding from 30 employees two years ago to 265 today.
  • Jeong Kim, Yurie's chairman and chief executive, will become Lucent's president of carrier networks within the data networking systems' group.
  • Yurie develops equipment that uses asynchronous transfer mode (ATM) technology, which breaks up telecommunications traffic into small "packets" that can be sent more efficiently through phone lines.
  • Lucent already buys Yurie's equipment and resells it, so the merger is not that much of a surprise, according to analyst Carlos Valieras.
  • Yurie's stock has soared from $12 in February 1997 to close at $34.75 on the Nasdaq after the announcement.
  • The merger was approved by the boards of both companies.

Statistics:

  • Lucent will pay $35 a share for Yurie, which is $3.75 more than the previous closing price of $34.75.
  • Yurie's sales grew from $1 million in 1994 to $51 million in 1997.
  • Yurie expanded from 30 employees two years ago to 265 today.
  • Yurie's stock has increased by over 280% since February 1997.

Sources:

  • Business Week magazine - dubbed America's hottest growth company last year.
  • Friedman, Billings, Ramsey & Co. - provided an analysis of Yurie's ATM technology.
  • Dow Jones - reported on Yurie's stock spiking to $31.50 on Friday.
  • Nasdaq - reported Yurie's stock price.
  • Lucent Technologies Inc. - announced the acquisition.
  • Yurie Systems Inc. - provided information on the company's technology and expansion.

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