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News > Deals
Nortel acquires Sonoma
August 15, 2000: 9:20 a.m. ET

High-speed Web access provider accepts $540M stock takeover offer
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NEW YORK (CNNfn) - Nortel Networks Corp. said Tuesday it is buying Sonoma Systems, a privately held maker of high-speed Internet access devices, for $540 million in stock, aiming to extend its position in optical Internet service offerings to businesses.

Based on a Nortel share price of $78.13, the deal calls for Nortel to issue approximately 6.9 million shares. Nortel plans to pay $480 million in stock when the deal closes in the fourth quarter, and an additional $60 million in stock if Sonoma meets certain business objectives during the first year after closing.

graphicBrampton, Ontario-based Nortel said the acquisition will not affect earnings in calendar 2000, and will add slightly to earnings per share from operations in 2001. The deal is subject to regulatory and stockholder approval.

Marina del Rey, Calif.-based Sonoma offers broadband integrated access devices that enable service providers to deliver Internet connectivity, voice, data and video over a single connection to business customers.

Nortel said researchers at Yankee Group forecast the carrier-managed services market will reach $18 billion in worldwide sales by 2002, up from $10 billion this year.

Nortel and Sonoma already have previous business relationships, integrating Sonoma products with Nortel's network.

Shares of Nortel closed up 3-1/4 at 79-1/4 in Monday trading. Back to top

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