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Routing

Lucent to Spend $207M for Riverstone

Lucent Technologies Inc. (NYSE: LU) has prevailed over Ericsson AB (Nasdaq: ERIC) for the business and assets of Riverstone Networks Inc. (OTC: RSTN.PK) , Riverstone announced late on Tuesday. (See Lucent Wins Riverstone Auction.)

The two companies squared off in an auction on Monday following Ericsson's bid of $178 million for Riverstone, an offer that was $8 million better than Lucent's original agreed-upon purchase price. But, when the final gavel came down, Lucent prevailed and now that company gets Riverstone's assets out of bankruptcy.

Lucent's final bid was $207 million in cash and the company modified its purchase agreement from February 7. So it is paying a 21 percent premium over its original bid, thanks to the bidding up by Ericsson. (See Ericsson Wants Riverstone and Lucent Gets Riverstoned.)

The terms of the deal are subject to final approval by the bankruptcy court, and that hearing is set for March 23.

Ken Wirth, president, Multimedia Network Solutions, at Lucent, said in a prepared statement that "Riverstone's people and products will play an important role in advancing Lucent's end-to-end converged Ethernet/optical solutions and helping us in our efforts to take share of a growing carrier Ethernet market."

The parties currently expect the transaction to close in early April.

SEC filings reveal that Lucent has made an $11.9 million cash deposit which will be credited to the purchase price upon the closing of the transaction. The purchase agreement says Lucent will have to pay a $5.1 million breakup fee, along with reimbursed expenses of up to $1 million, if the deal falls through.

— Phil Harvey, News Editor, Light Reading

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jasanz 12/5/2012 | 4:00:50 AM
re: Lucent to Spend $207M for Riverstone Ouch!!! Poker game? "I cover your bet, ERICY, and I raise it by a few millions"?

Not sure I understand if this is a good deal for LU or not... What about the latest partnership deal with Anda Networks? I think that Riverstone fits very well withing LU's portfolio... so well to justify the price?
cfranca10 12/5/2012 | 4:00:50 AM
re: Lucent to Spend $207M for Riverstone I believe Lucent sees it as the last chance to sell themselves as a complete tripe play integrator and compete with ALA+MSFT solution.
The problem is its middleware & STB alternatives...
jasanz 12/5/2012 | 4:00:47 AM
re: Lucent to Spend $207M for Riverstone What is stopping LU to partnership ALSO with MSFT? LU does not have a bad story on IPTV... why all the honors are going to ALA?
pepperc9 12/5/2012 | 4:00:45 AM
re: Lucent to Spend $207M for Riverstone (1.27)*$1.06? or ???
metroman 12/5/2012 | 4:00:44 AM
re: Lucent to Spend $207M for Riverstone ...there are 135 million outstanding shares and the cash available will distributed to the holders..
metroman 12/5/2012 | 4:00:44 AM
re: Lucent to Spend $207M for Riverstone not sure what happened there....

They get $207m from LU

They work out what they owe (this was in the Ch.11 submission for the most part)

They pay the people they owe, they might set some money aside for things that might happen (legal issues etc.) and then that is what you will get back. They have said that they will submit a liquidation plan during April which should outline all of this.
metroman 12/5/2012 | 4:00:44 AM
re: Lucent to Spend $207M for Riverstone The company gets $207m from LU

They work out what they definately owe.
metroman 12/5/2012 | 4:00:44 AM
re: Lucent to Spend $207M for Riverstone The company gets $207m from LU

They work out what they definately owe.
pepperc9 12/5/2012 | 4:00:44 AM
re: Lucent to Spend $207M for Riverstone OOPS! Meant 1.21*$1.06
pepperc9 12/5/2012 | 4:00:38 AM
re: Lucent to Spend $207M for Riverstone I guess what I meant was that after the announcement of the Lucent buy at $170M the "market" valued the stock at $1.06 i.e. "it" did the math for me. With the final offer at $207M, i just figured the new share value should be (207/170)*$1.06 +/- epsilon.
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