RealTime IT News

Redback Acquires Siara for $4.3 Billion

Broadband equipment maker Redback Networks Inc. Monday acquired Siara Systems for $4.3 billion in stock.

Under the terms of the agreement, which was approved by each company's board of directors, Redback (RBAK) will issue 31.3 million shares for all-outstanding shares, options and arrants of Siara Systems.

Based on Friday's closing price of $136.50, the transaction is valued at $4.3 billion, and will create a new entity with a total value of $11.2 billion.

When the deal is approved, Redback stockholders will own 62 percent of the new business entity, and Siara stockholders will own 38 percent.

The merged company will retain the name of Redback Networks, and corporate headquarters will remain in Northern California. Redback plans to retain Siara's Vancouver, British Columbia-based software development facility as a second development center.

With the addition of Siara's product portfolio and network operations software, Redback plans to extend its service creation and management capabilities across their entire New Access Network service line-up.

Although Siara has yet to release a product, its engineering staff is considered one of the company's key assets.

Redback is in the process of expanding their new access network. NAN is designed to span all layers of transport and services from the edge of the optical core to global corporate networks and individual broadband subscribers. The network is fueled in part by the massive installation of fiber optic lines in the major metropolitan areas nationwide.

Dennis Barsema, Redback chief executive officer and president, said the Siara merger positions Redback to become one of first equipment suppliers focused on developing integrated solutions for their New Access Network.

"We expect the combination of Siara Systems and Redback to create a powerful supplier in the communications industry, focused on serving the next generation access and service creation requirements of carriers and service providers," Barsema said.

"From the edge of today's core optical backbone networks to global corporate networks to individual broadband subscribers, Redback Networks expects to work closely with its customers as they build the New Access Network."

Redback's NAN equipment replaces multiple point-of-presence and central office-based devices with integrated devices. The upgrade reduces complex operations and takes less power and space to operate. Because installation is simplified, the NAN equipment decreases the time frame required to provision new services and expand broadband access.

With the addition of Siara's expertise in optical, silicon and IP technologies, Redback expects to accelerate Internet service providers' and telecommunication carriers' plans for leveraging next generation broadband services.

Vivek Ragavan, Siana chief executive officer and president, said market forces combined the two companies to form a definitive leader in broadband service deployment.

"In this very competitive market, retaining a customer base and increasing revenue are the key business issues service providers and carriers are facing," Ragavan said.

"Redback Networks has been extremely successful in developing and selling solutions that achieve those objectives for the broadband access market," Ragavan added. "With the addition of Siara's core technologies and products, Redback Networks expects to deliver next-generation of networking solutions our customers could leverage to define the transport and value-added services of the future."

Siara's Optical, ASIC and IP Technology complements Redback's subscriber and service management operations. Siara's portfolio of software products is optimized for both broadband access and metropolitan networks. The applications are designed to enable ISPs and carriers to deliver both traditional time division multiplexing (TDM) and IP-based services with carrier grade reliability, security, and scalability.

Redback Networks is an industry leader in broadband subscriber management and service creation. More than 120 ISPs and carriers have deployed the company's subscriber management system worldwide.