Cabletron to Buy NetVantage
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Cabletron competes directly with Cisco, 3Com Corp., and Northern Telecom's new acquisition Bay Networks in the networking provider market. The company said that with this merger it plans to expand into the 10/100 Mbps switching segment of the LAN switch market.
Cabletron also disclosed that it will enter into OEM and manufacturing agreements with NetVantage, effective immediately, under which Cabletron will sell and manufacture select NetVantage products. As part of the manufacturing agreement, Cabletron will pay NetVantage $5 million in an initial payment.
Financial terms of the acquisition call for .6154 of a share of Cabletron common stock to be exchanged for each outstanding share of class A common stock and class B common stock of NetVantage and each ten shares of class E common stock of NetVantage. In addition, NetVantage stock options will become options to acquire Cabletron shares at an adjusted price reflecting the exchange ratio.
Yesterday Cabletron reported first quarter fiscal 1999 results including a net loss of $152.3 million, or $0.93 per share, compared with net income of $58.8 million, or $0.37 per share compared to first quarter 1998. Net revenues were $365.7 million, compared with $362.7 million in the first quarter of 1998, with a net income for the quarter of $6.0 million, or $0.04 per share.