Lucent Technologies today announced that the U.S. Bankruptcy Court of Delaware has granted an order approving the company's purchase of the assets of Riverstone Networks, a maker of carrier-grade Ethernet routers for the telecommunications industry. The sale conditions are set forth in a definitive asset purchase agreement initially entered into among the parties on February 7, which was amended following an auction of those assets. The purchase price under the amended agreement is $207 million.
The court order is subject to an objection period of 10 days following its entry, which occurred today. In addition, the closing of the transaction remains subject to the receipt of certain regulatory approvals in Germany, which the company anticipates could happen early in April. Lucent received Federal Trade Commission approval of the purchase on March 17, 2006.
The integration of Riverstone's assets into Lucent will create an industry leader in the delivery of end-to-end carrier-grade Ethernet and converged Optical/Ethernet solutions. Analysts have estimated that the carrier-grade Ethernet market will grow from just over $4 billion in 2005 to more than $7 billion by 2008.
The purchase will solidify Lucent's ability to deliver carrier-grade end- to-end Ethernet solutions for wireline and wireless networks worldwide, and accelerate Lucent's development of next-generation converged Optical/Ethernet solutions. These solutions will enable service providers to offer business services such as Ethernet Virtual Private Networks (VPNs), as well as advanced multimedia "triple play" services -- such as IPTV, multiparty video conferencing and more -- for consumers.
Riverstone's carrier Ethernet platforms also complement Lucent's industry- leading IP Multimedia Subsystem (IMS) and broadband access portfolios, enabling operators to leverage end-to-end, Ethernet-based architectures that support the delivery of business, residential and next-generation broadband services at lower cost with superior quality of service (QoS), performance and reliability.
"The acquisition will enable Lucent to build on the strong momentum we are seeing in the carrier Ethernet market, both with Riverstone platforms as well as Lucent's existing converged Optical/Ethernet solutions," said Ken Wirth, president and general manager, Multimedia Networking Solutions, Lucent Technologies. "Carrier Ethernet features a rich set of capabilities that makes it ideal for business services, supports the very cost-effective delivery of residential triple play, and also offers a very compelling solution to address service providers' data transport and wireless backhaul requirements."
"The integration of Riverstone's carrier-grade Ethernet technology into Lucent's portfolio will enable us to more aggressively pursue Ethernet market opportunities and help us reduce the development cycle for next-generation platforms that are currently being brought to market. It also is expected to result in synergies that will offer substantial benefits in other areas of our business," Wirth added.
Riverstone assets to be acquired include primarily Riverstone products, intellectual property, certain contracts and receivables, tangible long-lived assets, accounts payable and certain other accrued liabilities. The net assets primarily exclude cash, investments and debt.
Substantially all of Riverstone's 400 employees are expected to join Lucent.