In a deal valued at about $77M, ADVA has agreed to buy Movaz to build its US WDM market share

Phil Harvey, Editor-in-Chief

June 6, 2006

2 Min Read
ADVA to Marry Movaz

ADVA Optical Networking (Frankfurt: ADV) announced late Monday evening that it will acquire Movaz Networks Inc. for about $6 million in cash and 6,526,529 shares of ADVA common stock, which at a closing price of $10.89 on Monday, values the entire stock and cash transaction at about $77 million.

Movaz says it has a customer base of nearly 100 telecommunications carriers; cable operators; research and educational organizations; and government agencies. The company has raised more than $182 million in funding since its inception in 2000, having closed some $20 million in funding with a $12 million line of credit as recently as January.

The pairing comes as no surprise to Light Reading's audience. Nearly a year ago, Light Reading reported that ADVA had been talking to Movaz and other companies about possible combinations as the company looked to build its U.S. market share by snapping up smaller, more focused equipment companies. (See ADVA Eyes Movaz, Meriton.)

In addition to the market share expansion, analysts say ADVA's been on the lookout for complementary technology in the metro wavelength division multiplexing (WDM) and the reconfigurable add-drop multiplexing (ROADM) space.

"Movaz really specialized in regional metro networks that had spans up to 1,000 kilometers, and that's a space ADVA was a little slow to conquer," says Scott Clavenna, chief analyst at Heavy Reading.

Under the acquisition agreement, ADVA is to acquire all outstanding shares and options of Movaz. There's also a cash earn-out component equivalent to 1 million ADVA shares that could become payable within twelve months after closing under certain conditions, the company says. That condition, a source says, is related to whether the merger between Lucent Technologies Inc. (NYSE: LU), one of Movaz's biggest OEM customers, and Alcatel (NYSE: ALA; Paris: CGEP:PA), one of ADVA's competitors, goes through.

The deal is expected to close in July 2006.

The companies say a majority of Movaz's 150 employees will be added to ADVA's North American operations. Movaz CEO Bijan Khosravi will stay on for a short integration period but will exit the company shortly thereafter.

ADVA has been steadily building its product portfolio from the outside, as well as inside, during the past couple of years. The company acquired Covaro in late 2005 and it bought Metro Packet Systems in 2004.

ADVA has increased its revenue guidance for the year to levels of 24 percent to 32 percent above 2005 revenues, which were about $168.69 million.

— Phil Harvey, News Editor, Light Reading

About the Author(s)

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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