Riverstone Integrates Pipal Systems

Riverstone Networks has won shareholder approval and met other conditions needed to close its purchase of telecommunications equipment startup Pipal Systems. Both companies are based in Santa Clara, Calif.

The deal includes of 8 million shares of Riverstone common stock and $3.5 million in cash. Additionally, Riverstone assumes $6.5 million in debt and approximately $5.8 million in bonus arrangements tied to milestones for Pipal Systems’ employees.

Pipal Systems is privately held and was founded in 2001 by industry veterans from Nortel, Shasta and Redback. It has about 40 employees.

Though still in the “development stage,” the firm’s engineers are developing advanced Ethernet and multiprotocol label switching technologies, which helps network operators steer traffic around bottlenecks.

Riverstone hopes to use Pipal Systems’ equipment to bring new service abilities to carrier, campus metro and corporate networks.

The acquisition comes as Riverstone works to improve its technology and target geographic and industry sectors that are still buying equipment.

“While the worldwide marketplace remains soft, new customers such as the Pentagon and Telefonica de Espana give us confidence in both our strategy and the resiliency of the market,” Riverstone CEO Romulus Pereira said recently in discussing the company’s outlook.

Riverstone is one of four spinoffs from the former Rochester, N.H.-based networking giant Cabletron Systems.

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