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Alvarion Saves on InterWave

Broadband wireless access vendor Alvarion Ltd. (Nasdaq: ALVR) has had the price tag of its planned acquisition of InterWave Communications International Ltd. (Nasdaq: IWAV) slashed by more than $15 million, a move designed to end the war of words between both firms.

Earlier this month Alvarion said it was scrapping plans to buy the compact base-station vendor for $56 million, following a review of InterWave's financial results "as well as anticipated results going forward" (see Alvarion Could Jilt InterWave ).

In response, InterWave described Alvarion's move as "a material breach of the agreement" and signaled its intent to take legal action (see Alvarion, InterWave in Spat and InterWave Files Lawsuit).

The two companies now appear to have resolved their differences. A joint statement today declares that "the amended agreement calls for Alvarion to provide additional interim financing and to acquire InterWave for $4.18 per share in cash, for total consideration of approximately $40.5 million."

"We couldn't close until we renegotiated the deal," Alvarion's CFO Dafna Gruber told a conference call with analysts. "The reduction in the price of the deal is to compensate mainly for the reduction in cash generated by InterWave since July '04, when we signed the original contract" (see Alvarion Snaps Up InterWave).

CEO Zvi Slonimsky played down fears surrounding InterWave's recent financial performance. "InterWave represents a highly complimentary fit in terms of product, geography and market segment... The bottom line is that this reduction under the new terms will produce an excellent internal investment for our shareholders... We think that this deal fits Alvarion's strategy going forward as we enter the mobile phase of WiMax."

"There are numerous strategic advantages to this combination for both companies," added Erwin Leichtle, CEO of InterWave, in a statement. "We hope to distribute revised proxy material and hold a shareholder meeting as soon as possible to approve the revised terms."

This meeting is expected to take place in the next "six to eight weeks."

Alvarion's stock closed at $15 (up 0.4 percent) at the end of Friday trading. InterWave's share price fell 0.12 percent to $2.46.

— Justin Springham, Senior Editor, Europe, Unstrung

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