Optical/IP Networks

ECI Closing in on Laurel

Having publicly stated its desire to expand its product portfolio through acquisitions, industry sources say ECI Telecom Ltd. (Nasdaq/NM: ECIL) has closed a deal to buy B-RAS and edge-routing specialist Laurel Networks Inc. (see ECI Lines Up Acquisitions).

Light Reading believes a deal has been signed and should be announced in the coming days. ECI's management has been unavailable for comment late this week during an extended public holiday in Israel, and a spokeswoman at Laurel says: "I can't confirm that. We can't comment."

The two companies had been rumored to have been in talks earlier this year, but it is believed that earlier negotiations had broken down over price. It now seems the talks were subsequently reignited.

Details of the deal were not available at press time, but some industry sources reckon Laurel would likely be sold for between $200 million and $300 million.

Of course, not everybody thinks it's worth that much. "One dollar," said one venture capitalist when asked how much the company was worth, while at the same time requesting anonymity (and perhaps fearing for his life).

The deal would be good for both players, believes Graham Beniston, analyst at large at Heavy Reading. He says Laurel has a "very creditable technology. It leads many of the other B-RAS vendors in terms of scaleability. And both companies are well versed in ATM and IP, so should be able to work together in legacy as well as next-generation networks. I can't see much of a downside to a move like that."

ECI says it has a cash arsenal of about $290 million for acquisitions. Laurel, which has recently refocused its efforts on the emerging video-enabled networks market and prospects in Europe, has raised more than $100 million in backing, most recently in September 2003, when it landed a $20 million round (see Laurel Pumps Up IPTV Plans, Laurel Looks to Europe, and Ciena Takes Stake in Laurel).

— Ray Le Maistre, International News Editor, Light Reading

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