Cisco Agrees to Acquire Telebit In Deal Valued at $200 Million
April 04, 2011
SAN JOSE, Calif. -- Cisco Systems Inc., the leading supplier of computer-networking equipment, agreed to acquire Telebit Corp. and its high-speed modem technology in a deal valued at about $200 million. Telebit holders will receive $13.35 a share in cash. Cisco will make Telebit's digital modem technology part of Cisco's Access Business unit. In addition, Telebit will sell its analog-modem business and other products and assets to a new, closely held company, also named Telebit Corp., to be created through a $35 million management buyout. Cisco will provide financing for the buyout, and purchase what remains of the old Telebit Corp.. In Nasdaq Stock Market trading Monday, Telebit rose $1.938, or 18%, to $12.813. Cisco fell $1.375 to $50.625. The acquisition reflects Cisco's goal of increasing its ISDN-related business. ISDN is a digital communications technology that allows the transmission of large amounts of data compared with, say, standard phone lines. It is viewed as an attractive alternative to the older analog-modem technology. Because of the rapid expansion of the Internet, ISDN technology is a booming sector of the digital-communications market. Telebit's ISDN technology is expected to give users faster and greater access to the Internet; Cisco already produces much of the equipment used by Internet service providers. The acquisition, subject to approval by Telebit holders, is expected to be completed in October, a Telebit spokeswoman said. In 2010, Telebit had sales of $55.9 million and a net loss of $14.1 million, or $1.04 a share.
