Alvarion Could Jilt InterWave

Broadband wireless access vendor Alvarion Ltd. (Nasdaq: ALVR) is having last-minute doubts about its planned $56 million acquisition of InterWave Communications International Ltd. (Nasdaq: IWAV), sparking a war of words between the two firms.

Alvarion first announced the proposed deal in July (see Alvarion Snaps Up InterWave), but late last week the company said it was scrapping its plans to buy the compact base-station vendor "under current terms," following a review of InterWave’s financial results "as well as anticipated results going forward."

In a prepared statement, Alvarion said it has "determined that InterWave has experienced a material adverse effect with respect to its business and has advised InterWave that InterWave will not be able to cause all of Alvarion’s conditions to closing of the amalgamation to be satisified."

As a result, “Alvarion has further advised InterWave that it will not complete the amalgamation on the terms set forth in the amalgamation agreement and would be willing to discuss with InterWave concluding a transaction on different terms.”

Alvarion was keen to stress that the change of heart was not caused by its own financial performance. “We have not experienced any material changes in our business. We are expecting to report third quarter results in line with our guidance and the outlook remains strong,” stated Alvarion CEO Zvi Slonimsky in the statement.

In response, InterWave describes Alvarion's move as “a material breach of the agreement” (see Alvarion, InterWave in Spat). "There is no material adverse effect or any other basis, legal or otherwise, for Alvarion to not comply with its obligations under the agreement,” according to InterWave.

Earlier today, InterWave announced it has filed a lawsuit against Alvarion, seeking "specific performance of the amalgamation agreement" and "compensatory and punitive damages in excess of $75 million." (See InterWave Files Lawsuit.)

Both companies were unavailable for comment as this article was published.

Alvarion’s stock closed at $13.49 (up 0.55 percent) at the end of Friday trading. InterWave’s share price fell 2.36 percent to $3.38.

— Justin Springham, Senior Editor, Europe, Unstrung

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