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Nortel buys software firm
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June 14, 2000: 4:42 p.m. ET
Acquires EPiCON for $275 million; later inks deal to build Brazil telecom network
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NEW YORK (CNNfn) - Nortel Networks culminated a busy day Wednesday by agreeing to acquire EPiCON for $275 million in stock, furthering its push into the application service provider market, and signing a deal to deploy one of the most advanced telecommunications networks in Latin America.
Brampton, Ontario-based Nortel (NT: Research, Estimates), currently the world's No. 2 maker of telecommunications equipment, said it will issue roughly 4.99 million shares of stock, valued at $55.15 each, to acquire the privately-held EPiCON, which provides enterprise software.
The transaction is slated to close by late in the third quarter or early fourth quarter of this year, subject to shareholder and regulatory approval. It is expected to be neutral to Nortel's earnings per share from operations in calendar 2000 and 2001.
 In late January, Nortel bought a 9 percent stake in EPiCON for $10 million, forming a partnership to develop products for application service providers (ASPs), or "apps on tap," to deliver services to small- and medium-sized business customers.
Nortel said Wednesday it will integrate EPiCON's application management technology into its line of networking products, known as Nortel Networks Preside Managed Application Services Platform. EPiCON's applications management software products allow service providers to transmit applications to desktops and automatically distributes software and update changes to thousands of Windows-based desktops from a central server.
The company said Gartner Group, the technology research firm, expects the APS market to soar from $900 million in 1998 to $23 billion in 2003.
EPiCON also has relationships with Cisco (CSCO: Research, Estimates) and software provider Citrix (CTXS: Research, Estimates).
Expanding its presence in Brazil
Separately, Nortel also announced it was awarded a roughly $240 million, three-year contract by telecommunications operator GVT to design and deploy a telecommunications network to serve the south and central regions of Brazil.
The network will span nine Brazilian states, including the capital city Brasilia, encompassing approximately 30 percent of the country housing roughly 38 million people.
The contract specifically calls for Nortel to provide the switching systems, optical backbone and access equipment for the network, which is slated to begin offering voice, data and Internet services by year's end.
Nortel has now signed contracts with three of the four telecom operators in Brazil, having won contracts with Vesper and Intelig last year. Nortel's systems are expected to cover 97 percent of the country, an area greater than the continental United States.
Shares of Nortel gained 1-1/8 to 64-11/16 in trading Wednesday on the New York Stock Exchange. 
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Nortel Networks
EPiCON
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