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FTC Clears Ciena-ONI Deal

The Federal Trade Commission has granted early termination of the antitrust waiting period under the Hart-Scott-Rodino Act for Ciena Corp.'s proposed acquisition of ONI Systems .

In February, the Linthicum, Md.-based Ciena, a builder of optical networking equipment, said it was acquiring ONI, which markets and sells optical networking equipment specifically designed to address bandwidth and service limitations of regional and metropolitan networks, in all stock deal valued at the time at $900 million.

Under the terms of the agreement, all outstanding shares of ONI common stock will be exchanged at the ratio of 0.7104 shares of Ciena common stock for each share of ONI common stock, which will represent approximately 24 percent ownership of the combined company.

"We're combining Ciena, the leader in core optical networking and switching, with ONI, the leader in metropolitan optical networking, to create a new, stronger, next-generation optical networking leader," Gary Smith, Ciena's president and chief executive officer (CEO), said in February. "With this acquisition, Ciena dramatically expands its metropolitan presence. We also further improve the economics of network ownership for our customers by enhancing our ability to offer carriers the most comprehensive, next-generation optical networking solution."

According to Ciena officials, the company expects the transaction will result in annualized operating expense "synergies" of $55 to $65 million for the combined company, as well as additional manufacturing efficiencies. It is estimated that the combined company would have approximately $1.3 billion of cash net of debt as of January 2002.

"Combining our solutions creates the first company able to offer service providers true end-to-end and best-of-breed solutions," said Hugh Martin, chairman, president and CEO of ONI Systems. "We believe Ciena and ONI have complementary product sets and development efforts and the strongest optical transport, switching and management software teams in the industry. Through this combination we create a new leader, unencumbered by legacy systems and with the ability to accelerate the deployment of next-generation optical networking and the evolution of networks from legacy infrastructures. I believe that we will have the required technology, critical mass and vision to become the supplier of choice for service providers worldwide."

The deal remains subject to various conditions and approval by other appropriate government agencies and the stockholders of Ciena and ONI. The transaction is expected to close during the second or third calendar quarter of this year.