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Siemens Buys Efficient Networks For $1.5 Billion

Siemens Information and Communications Network Group officials, looking for a digital subscriber line solution, found its answer in Dallas-based Efficient Networks, Inc., and announced Thursday its plans to purchase the company for about $1.5 billion.

Under terms of the agreement, which should be finalized by April, 2001, Siemens will buy at least 51 percent of Efficient's stock, which it valued at $23.50 per share. After the tender offer, the company is then required to acquire the remaining shares through the merger of a Siemens subsidiary to Efficient.

According to officials, Efficient's management will continue to manage the company's worldwide operations.

The buyout gives the German carrier and enterprise network provider a ready-made digital subscriber line equipment arm, capable of providing everything from the DSL access multiplexers (DSLAMs) at the central office to the DSL modem attached to the consumer or business user's computer.

Roland Koch, Siemens president, said the buyout is consistent with his company's plans to provide an end-to-end solution for his customers.

"This acquisition is a key element in our strategy to strengthen our product portfolio, optimize processes, energize staff and increase our profitability," Koch said. "With our focus on broadband access solutions, we can now offer our customers comprehensive end-to-end solutions, dramatically increasing our presence in this rapidly growing market segment, and enabling us to become one of the top three global suppliers of broadband solutions within the next three years."

Siemens is positioning itself to capture a significant share of the worldwide demand for high-speed Internet services, of which DSL plays a significant part.

So much a significant part that, according to a recent study by Cahner's Instat, an online research company, DSL numbers are expected to rise worldwide from a little under five million new users in 2000 to about $24 million in 2004.

Since a lot of the infrastructure is already there, a company's ability to produce quality equipment is what will make or break DSLAM makers in the coming years, said Ernie Bergstrom, Instat's advanced carrier strategies service analyst.

"When DSL first came onto the scene, DSLAMs were little more than a simple box, routing traffic as it came through," Bergstrom said. "As service providers begin to refine their product offering, the DSLAM has changed, allowing for various types of DSL in one unit, and even providing for a variety of value-added services to be delivered."

The future of DSLAM improvements for Siemens now lies in the hands of former Efficient founder and chairman of the board and newly-minted president of Siemens access solutions division. The new president is confident the company will meet all challenges, and looks forward to expanding his former company's operations outside its current borders.

"With the strong presence of Siemens ICN in over 160 countries, this acquisition will empower us to further accelerate the growth of our business, and enhance our ability to drive the global adoption of broadband networks and services," Floyd said.



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