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Lucent sees light at Yurie
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April 27, 1998: 12:53 p.m. ET
AT&T spin-off to buy maker of data-networking equipment for $1 billion
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NEW YORK (CNNfn) - Telecom equipment powerhouse Lucent Technologies Inc. said Monday it will acquire Yurie Systems Inc., a maker of data, voice and video networking equipment, for about $1 billion.
The deal, which Lucent said has been approved by the boards of both companies, involves a $35-share tender offer and is expected to be completed by June 30.
Shareholders holding more than 50 percent of Yurie's common stock on a fully diluted basis have agreed to tender their shares, Lucent said.
Once the deal is completed, Lucent plans to take an unspecified charge in the third quarter to pay for the deal. Lucent said it expects the buyout to be dilutive to earnings in the first year.
Landover, Md.-based Yurie, which BusinessWeek magazine named as its "Number One Hot Growth Company" in 1997, makes and services equipment for wide area networks for business and government.
The buyout follows plans by Lucent -- set in motion last year -- to tap the fast-growing market for data-networking equipment.
"Today we fill in another key space in our data-networking portfolio with this important acquisition,'' said Bill O'Shea, president of Lucent's Data Networking Systems group, in a statement.
"The ATM (asynchronous transfer mode) access opportunity is growing explosively -- at annual rates greater than 60 percent," O'Shea said. "Adding Yurie to the Lucent team will help us meet our aggressive leadership and growth objectives in this business.''
Yurie and Lucent have had a marketing agreement since August, and AT&T Corp. -- from which Lucent spun off -- controls the rights to market two key Yurie products to the U.S. government.
Jeong Kim, chairman and chief executive of Yurie, will join Lucent as president of Carrier Networks within the data networking group.
Murray Hill, NJ-based Lucent is the nation's biggest maker of telecommunications products and software.
Shares of Lucent (LU) were off 2-11/16 at 70-11/16, while Yurie shares (YURI) surged 3-1/8 to 34-5/8 in trading Monday.
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