Glenayre Technologies Inc. announced it has signed an agreement to acquire Cnet Inc., a Plano, Texas-based provider of engineering software tools for wireless communications systems.
Glenayre said the purchase will consist of a tax-free exchange of an undisclosed number of new shares of Glenayre common stock to the approximate 30 shareholders and optionholders of Cnet.
The primary shareholders, who own more than 50 percent of Cnet shares, have allowed Glenayre a separate option to buy their shares if specific events occur that result in merger plans being called off. When the transaction is finished, Cnet shareholders and optionholders will own less than 1 percent of Glenayre on a fully diluted basis. The deal is expected to close in the fourth quarter.
Cnet will remain in Texas and will operate as a division of Glenayre. The company will continue to market its products under its brand name and trademarks, said Glenayre.
Glenayre said the merger has the potential to propel it to the forefront of the global wireless communications market. By combining Cnet’s multivendor network management software with its Modular Voice Processing system, Glenayre said it will be able to address all wireless markets.
“What is happening in the industry is a consolidation and system expansion. Cellular operators are ending up with numerous vendors for their networks,” said Eric White, Glenayre’s vice president of corporate development. “Cnet brings the ability to operate the network regardless of whose equipment is in the network.” Other network management products don’t have that capability, he said.
“We are very optimistic about operation and maintenance as we grow as a cellular and broadband [personal communications services] business,” said Glenayre President and Chief Operating Officer Gary Smith. Cnet’s product “is a key component that cuts across the entire infrastructure. It’s an additive solution to a problem our customers have today.”
The key elements of Cnet’s software will serve as the network manager in the MVP system, enhancing the system’s current capabilities, said the company. Glenayre anticipates future applications within its paging systems. The MVP system is Glenayre’s enhanced services platform for cellular technology that provides a variety of applications, including one number service, fax mail, voice mail and pager notification.
“There’s a whole host of products that we’ll take and integrate into an enterprise management type of system in the future,” said White.
Cnet’s customer base consists of paging, cellular, PCS and narrowband PCS providers located in the United States.
“They’re building momentum on PCS broadband and cellular, and they’re talking to the same people we are,” said Smith. “We have a good base in terms of leveraging and direct sales capability.” Glenayre’s worldwide distribution market presence will allow Cnet to distribute its products internationally as well. “One thing that Glenayre is very interested in doing is adding complementing businesses,” said Smith.
Glenayre and Cnet have shared customers in the past. Glenayre combined its MVP system with Cnet’s management network software for Bell Atlantic Nynex Mobile’s cellular network. On the paging side, the two companies teamed up to map out Paging Network Inc.’s narrowband PCS systems in San Francisco.
Cnet was founded in 1986, by David Zumwalt, the company’s chairman and chief executive officer, Scott Greenwell, a member of Cnet’s board of directors, and Chuck Skaggs. The three also are the primary shareholders of the company.
Cnet employs about 40 people. Glenayre expects the number of employees to increase by the end of the year. Along with its network management products, Cnet develops and provides integrated operational support systems and radio frequency planning software.
This is Glenayre’s fourth acquisition. In April 1995 the company acquired Western Multiplex, a point-to-point microwave radio designer and manufacturer. Since 1993, the company has been growing through acquisitions and joint ventures with various wireless companies.
