Mayan Buys Ticker Symbol

Networking startup Mayan Networks announced today that it will acquire Ariel Corp. (Nasdaq: ADSP) in an all-stock deal (see Mayan to Merge With Ariel).

The deal is a reverse merger, in which a younger startup company uses its stock to buy a public company. Ariel trades on the Nasdaq with a market capitalization of only $18 million. Mayan, a venture-backed company, is a late-stage startup that recently announced its first customer (see Mayan Finds a Customer).

All of the shares, options, and warrants in Mayan stock will be exchanged for securities representing 90 percent of the merged company, according to a statement released by the two companies this evening. Ariel shareholders, option holders, and warrant holders will retain an approximately 10 percent interest in the combined company.

Based on Ariel's closing price of $1.34 on Wednesday (giving it a market capitalization of $17.6 million), that puts the value of the combined company at about $176 million.

According to a statement filed with the SEC in November of last year, Ariel had nine-month revenues of $5.3 million and a net loss of $12.7 million for the period ending Sept. 30, 2000. At the same time it reported only $3.9 million in cash on its balance sheet. Light Reading was unable to locate more recent filings for the company.

Those kinds of numbers clearly indicate this isn't exactly a blockbuster liquidity event -- but it does earn the investors and employees of Mayan the ability to trade their stock, which may be the driving force behind the deal.

Another motivation? Esmond Goei, founder and Chairman of Mayan, also happens to be vice chairman of the board of Ariel. Goei will become CEO of the new company, replacing Ariel CEO Dennis Schneider.

Robertson Stephens served as an advisor on the deal.

Mayan has raised more than $90 million of venture capital funding to produce a Sonet-based multiservice access box.

Technologically, the companies plan to integrate Mayan's multiservice access platform with Ariel's remote-access server technology, according to the release. It quotes Goei: "The combination will allow us to market unique new SONET enabled solutions to carrier and ISP Remote Access Server (RAS) needs while continuing to pursue our current products and markets."

The company will have $50 million in cash and equivalents after the merger, according to both parties.

-- R. Scott Raynovich, Executive Editor,Light Reading http://www.lightreading.com
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jackofall 12/4/2012 | 8:39:17 PM
re: Mayan Buys Ticker Symbol Can the employees also sell immediately after this kind of deal, or do they have to wait 6 months?

Does their vesting get accelerated?
drone387 12/4/2012 | 8:39:17 PM
re: Mayan Buys Ticker Symbol I see a corporate award for innovation in someone's future. Have a bum startup that you can't unload? No worry mate. We have this bottom feeding, low capitalization NASDAQ company you can acquire and start the unloading right after the deal closes. I can see immediate synergies between Verilink and Jasmine for example. And I was worried about those poor investment bankers with no Cisco deals!
c-player 12/4/2012 | 8:39:16 PM
re: Mayan Buys Ticker Symbol Are ex-employees subject to a black out, or can we sell our stock right after the deal is complete? I will jump at $1.25/share.
OpticalObesity 12/4/2012 | 8:39:13 PM
re: Mayan Buys Ticker Symbol Hi:

A friend of mine at Sycamore mentioned that nobody on the LR staff has ever worked for a telecoms company or equipment company. Is this true?

Could LR please post the backgrounds of each of its editorial staff? It is common practice to do this, and you guys have been good at answering readers requests like mine.

Thanks alot
lightsout 12/4/2012 | 8:39:13 PM
re: Mayan Buys Ticker Symbol Before you read this take a look at www.areilcorp.com. (This was the reference lightreading provided for Ariel Corporation !!)

Quoted from Mayan/Ariel joint press release :
MAYAN's focus on optical networking and carrier markets, and its strong balance sheet are an ideal complement to Ariel's skills and products in rotary and reciprocating gas compressors. We believe, given the excellent product fit, our two companies can rapidly begin offering unique ip over gas solutions to ISPs and telephone operating companies.

Move over FTTH ..
figatree 12/4/2012 | 8:39:12 PM
re: Mayan Buys Ticker Symbol That was the wrong web address. it is www.ariel.com. For a second I too thought that was a dumb move and checked it out for my self.
sonet slinger 12/4/2012 | 8:39:07 PM
re: Mayan Buys Ticker Symbol One should not assume that this sort of liquidity event is synonymous with product direction but rather should look at stock as another currency with which additional entities might be acquired. I can see Mayan picking up Ocular or White Rock or any of the other MSPP startups that won't land another round of funding.

Cash is king, and Mayan's got money to burn.

Harry Callahan 12/4/2012 | 8:39:06 PM
re: Mayan Buys Ticker Symbol HA!

It's clear that you've been burning more than money to assert that $50mm is "money to burn".

Face it: Mayan's business is struggling and their investors no longer want to support them. They can not complete a public offering on their own, so their only alternative is to acquire the carcass of a dead public company and attempt to dump their stock before the owners of their convertible debt come and collect on the assets of the company.

Mayan has no intention of ever turning a profit and no intention of paying off their convertible debt piece. This is a last-ditch attempt by their founders to cash out on SOMETHING before the Repo Man comes knocking at the door.
light_on_dude 12/4/2012 | 8:39:06 PM
re: Mayan Buys Ticker Symbol They have enough cash to get a rugBURN...can you say scam...or golden parachute...me thinks i smell something very stinky coming down the road.
NorthByNorthwest 12/4/2012 | 8:39:06 PM
re: Mayan Buys Ticker Symbol money to burn?!

you MUST be kidding!!!

the combined entity has the poorest cash position of any listed telecom entity in the nation - and the second lowest market cap. this bizarre combo will be bankrupt in weeks!
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