Bay Networks to Buy Maker of Telecommuting Systems : Technology: The deal with Xylogics is in the form of a $330-million stock swap.
Bay Networks, a company that links computer networks, said Wednesday that it is buying Xylogics Inc., so it can offer remote workers the means to stay linked to their office systems.
The planned buyout is in the form of a stock swap valued at about $330 million. News of the deal sent Xylogics stock up as much as 37% to $50.75, before closing up $11.875 at $48.875 on Nasdaq. Bay Networks fell $1.375 to $48.875, also on Nasdaq.
Xylogics, based in Burlington, Mass., offers technology for the burgeoning field of telecommuting. It makes remote access and routing products, so a customer on the road can dial up on-line access to a corporate network or link up with the Internet.
While the market for so-called remote access products is still small, it is growing rapidly as more people work from home or simply spend more time in hotels on business trips but need to stay in touch.
“This is a market that is poised for very rapid expansion,” said Lee Doyle, an analyst at market research firm International Data Corp.
According to IDC, the worldwide market for remote access servers not based on personal computers is expected to grow from $345 million in 1994 to $1 billion by 1998.
Doyle said Bay Networks’ direct sales force and the strength of its own products could help fuel Xylogics’ growth.
Bay Networks supplies routers, intelligent hubs, high-speed switches and network management products for organizations building information networks.
It employs 3,840 people worldwide and has about 1,500 sales and technical service representatives. Its annual revenue exceeded $1.3 billion in fiscal 1995, which ended in June.
Xylogics employs nearly 290 people, including a sales and technical force of 38 people. It has offices in Britain, France, Germany and the Far East.
Xylogics’ 1994 worldwide market share, by ports shipped, is 21.2%, said Xylogics Chairman Bruce Sachs during a conference call with reporters.
Industry leader Shiva Corp., also based in Burlington, Mass., has a 12.7% share.
Besides bringing to Xylogics a large sales and technical staff, Sachs said Bay Networks also offers “a tremendous wealth of technology” that Xylogics plans to integrate into its remote access products.
He said Bay Networks’ stable of corporate clients should help Xylogics expand its remote-access business into the enterprise, or companywide, marketplace.
