Lucent Technologies to Buy Yurie Systems for $1 Billion
Lucent Technologies Inc., jumping deeper into the fast-growing data-networking business, said Monday that it will pay nearly $1 billion in cash, or $35 a share, for Yurie Systems Inc., adding equipment that makes it easier to send data and video via the Internet.
Lucent said the deal will result in an unspecified charge against earnings in the fiscal third quarter and slightly dilute earnings in the first full year of operations after the deal closes. The company, which was spun off from AT&T; Corp. in 1996, declined to comment on the extent of the expected dilution.
Despite the impact on earnings, and the premium price Lucent is paying--11% higher than Yurie’s closing share price Friday, the acquisition would benefit Lucent over the long term, analysts said.
Lanham, Md.-based Yurie makes equipment for Internet service providers, phone companies, government users and corporations that connect their communications networks to very-high-speed technology operating under the industry standard ATM, or asynchronous transfer mode.
Yurie’s equipment lets customers rapidly transmit video, voice and data, including Internet traffic, essentially by combining those information streams so they can travel through bigger, faster pipes, often over fiber-optic cable.
Lucent said the ATM network access market is expected to grow at annual rates of more than 60%.
It said the boards of both companies approved the deal, which is expected to close by the end of June.
Yurie’s chairman and chief executive, Jeong Kim, would join the Lucent networking group as president of Carrier Networks, which would remain in Landover, Md.
Under a marketing pact forged last year, Murray Hill, N.J.-based Lucent has been selling Yurie’s network access equipment under its own brand name. With the acquisition, Lucent also plans to integrate Yurie’s technology into its own to create new products.
Yurie’s shares jumped $3.25 to close at $34.75 on Nasdaq. Yurie’s shares have surged nearly 190% since its February 1997 initial public offering. Lucent’s shares fell $1.44 to close at $71.94 on the New York Stock Exchange.
