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SR Telecom completes acquisition of Netro, gaining broadband fixed wireless access products for about $100M in stock
September 5, 2003
MONTREAL -- SR Telecom(TM) Inc. (TSX: SRX; Nasdaq: SRXA), a world leader in fixed wireless access solutions, today announced it has completed the acquisition of Netro Corporation (NASDAQ: NTRO) , a leading provider of fixed wireless broadband access.
Netro stockholders of record as at the close of business on September 4, 2003 will be entitled to receive the merger consideration of SR Telecom Common Shares and a cash dividend payout paid by Netro. Based on SR Telecom's recently declared 1:10 share consolidation, holders of Netro common stock will receive 0.104727 shares of SR Telecom common stock for every share of Netro common stock that they hold. Netro stockholders will also receive an aggregate of US$100 million cash dividend equivalent to US$2.523554 per share, which is expected to be treated as a tax-free return of capital, subject to the conditions described in the proxy statement. Netro's common stock will be delisted from the Nasdaq National Market and will be deregistered under the Exchange Act.
"The transaction is a win-win situation. We will be able to leverage our global client base and distribution network to deploy and provision revenue- generating broadband technology solutions to service providers. The addition of Netro enables us to deliver end-to-end broadband wireless solutions, making broadband data and high-speed Internet access deployable in areas xDSL and cable cannot reach or are not economically viable or efficient," said Pierre St-Arnaud, SR Telecom's President and CEO.
The addition of Netro's 3.5GHz angel(TM) product and the airstar(TM) high- capacity fixed broadband access solution complements SR Telecom's product portfolio in terms of both frequency and applications. These additions, combined with SR Telecom's turnkey solutions capabilities and extensive distribution network, position SR Telecom to aggressively pursue a number of identified opportunities within its existing customer base and compete for significant new contracts that it would not otherwise be in a position to pursue.
"Over the last two years, SR Telecom has fundamentally reshaped itself through a series of complementary technology acquisitions that have significantly improved its competitive stature in the telecom industry. The completion of the Netro transaction is a key strategic event for SR Telecom, creating a much stronger company that is well positioned for revenue growth through an industry-leading portfolio of broadband technologies that meet the expressed requirements of our customers," said St-Arnaud. "By complementing our market-leading fixed wireless access solutions with Netro's carrier-class broadband products, we have strengthened our position as the world leader in fixed wireless services and solutions and established one of the industry's most advanced point-to-multipoint telecommunications portfolios."
The broadband fixed wireless access market is anticipated to grow considerably as service providers seek to deploy this technology in areas not reached by traditional wireline access networks. According to Ovum research, the worldwide market is expected to grow from 1 million lines today to 16 million lines in 2008. To date, licenses for 3.5GHz technology have been allocated in Europe, China and Latin America.
SR Telecom has already begun to see benefits from the transaction with airstar orders being booked from China and Mexico, along with a high level of bidding activity for both the angel and airstar products.
A further benefit of this transaction is that SR Telecom will improve its net liquidity. SR Telecom expects that immediately following the merger, the combined company will have approximately CDN$67 million in cash.
Netro's fixed broadband wireless systems are used by telecommunications service providers to deliver voice and high-speed data services for business and residential, access and mobile infrastructure applications. Netro was incorporated in the US with headquarters in San Jose, California, Redmond, Washington, and offices in Europe, Asia and South America. The Company's airstar and angel products have an impressive track record of performance and stability worldwide.
SR Telecom Inc.
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