SANTA CLARA, Calif.-Lucent Technologies Inc. said it agreed to purchase Ethernet developer Riverstone Networks’ assets for $170 million in cash.
Most of Riverstone’s employees are expected to join Lucent as part of the company’s Multimedia Network Solutions business.
“We are extremely pleased and energized to join forces with an industry leader that we have admired and with which we have closely collaborated over the past year,” said Oscar Rodriguez, president and chief executive officer of Riverstone.
The two companies have worked together delivering carrier-grade Ethernet routers to service providers.
Under terms of the agreement, Riverstone agreed to conduct the sale of its business under the provision of Chapter 11, section 363 of the U.S. Bankruptcy Code. Once that sale is completed, Riverstone said it plans to pay off its liabilities, including a $65 million loan. Any remaining cash is set to be distributed to Riverstone’s shareholders as part of a plan of liquidation, the companies said.
“Riverstone is a valued partner in a space that we believe will continue to grow,” said Ken Wirth, president of Multimedia Network Solutions at Lucent. “This combination is good news for our mutual customers and a symbol of our commitment to provide carrier-grade Ethernet solutions to the market.”
The companies noted that the transaction is subject to the customary regulatory approvals, and interestingly, they added that the agreement also hinges on the resolution of the Securities and Exchange Commission’s pending investigation of accounting issues that arose under Riverstone’s prior management, and bankruptcy court approval of the final sale terms. No shareholder consent is required.
In other Lucent news, the company announced it plans to partner with IBM Corp. to deliver Internet Protocol Multimedia Subsystem solutions that the companies said would help accelerate the introduction of blended services for wireless and wireline carriers. Both companies said they plan to jointly develop, test and deliver IMS infrastructure, service creation and network management solutions, including billing and operating systems solutions.
“In this competitive market, carriers are looking to bring next generation services to their customers quickly and at a reduced cost,” said Sandy Aitken with IBM. “Together IBM and Lucent will provide the capabilities and technology necessary to deliver a complete IMS solution for rapid deployment of composite and blended services.”
The companies said they are creating pre-IMS joint solutions for a number of services providers and explained that they are conducting proof of concept testing with five different service providers and have had joint discussions with several others in Europe, Asia and North America.
“Our collaboration around IMS was the logical next step in our relationship with IBM,” said John Marinho, corporate strategic marketing vice president at Lucent.
Terms of the agreement were not disclosed.
