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Optical/IP

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

reoptic 12/5/2012 | 3:15:15 AM
re: ECI Closing in on Laurel ECI does not overpay. Look at the low price for Chiaro and option to acquire. Given low revenue level for Laurel and comparables on Wavesmith think these guys will go for under 100M.
lilgatsby 12/5/2012 | 3:15:14 AM
re: ECI Closing in on Laurel Is Laurel - Wavesmith a true comparison? Isn't Laurel L3-MPLS-IP focused while Wave is L2-FR-ATM at its core?

JNPR & CSCO gurus, anything to add?

It seems Laurel has gotten a good amount of press recently...I'd be surprised if they went for your projected sub-100M.

lg
good_old_days 12/5/2012 | 3:15:12 AM
re: ECI Closing in on Laurel they cannot exceed the price of Vivace or Timetra (135, 150)...
tmc1 12/5/2012 | 3:15:10 AM
re: ECI Closing in on Laurel they cannot exceed the price of Vivace or Timetra (135, 150)...
--------------------------------------

you would think that... the vivace product has gotten a few customers and done ok but struggled, the TiMetra product has done amazingly well and been probably one of the best acquisitions ever (especially for Alcatel). it would make you think the price should be somewhere in between. i hope they get as much as they can and maybe more than that (200-300M) because i have some friends there and it is a decent product but those israelis drive a hard bargain and tend to be bottom feeders (just like the french) though.
asian echo 12/5/2012 | 3:15:03 AM
re: ECI Closing in on Laurel Well, remember Laurel was priced way high when they first landed Korea Telecom two years ago. What improvement has it made since then? nada except downing its value to 80 mil.
How could this be an accomplishment for the current management?
cyber_techy 12/5/2012 | 3:15:02 AM
re: ECI Closing in on Laurel
<bold>
<italics>
The anonymous VC priced Laurel at $1.00, while analysts priced it between $200M and $300M.

The VC was closer to the selling price without going over.

As for the analyst, if I were them I would be very worried about my current and future clients.
</italics>
</bold>
startup_shutup 12/5/2012 | 3:15:01 AM
re: ECI Closing in on Laurel Quite correct....

Days of startups are over. If you look at Silicon
Valley, money is flowing into buyouts now.

The main problem for the bay area G혀 if everyone is honest G혀 is the high cost of doing business and the lack of good engineers in the 30 G혀 50 years old age group. If you visit small companies or startups, you are likely to see many people over 50 or even 60.

So, the competitiveness of the valley is what worries me. Younger engineers living in lower cost metro areas will quickly catch up with the valley G혀 each new generation of design tools also makes it harder for the old guys in the valley G혀 like me.

HOUSING CRASH IS COMING!
lilgatsby 12/5/2012 | 3:14:48 AM
re: ECI Closing in on Laurel I stand corrected, nice call reoptic....$88m.

lg
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