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Ascend to Buy Rival Networker Cascade

Mergers: The $3.7-billion deal is among the industry's largest ever.

March 31, 1997|From Times Staff and Wire Reports

Ascend Communications said Sunday that it is acquiring rival computer networking firm Cascade Communications in a stock swap valued at $3.7 billion.

The deal is believed to be among the largest ever in the computer networking industry.

The companies said that they bring complementary strengths to the deal. Alameda-based Ascend is a leader in devices that let Internet users link to computer networks by telephones. Cascade, based in Westford, Mass., is a leader in fast switches that carry data for telephone companies.

For Ascend, the deal is by far the most significant in a recent acquisition spree during which the company has picked up several specialized networking firms. Most recently, it acquired Mountain View-based Whitetree Inc. for $72 million in stock.

The deal may offer another sign that the frenzied growth of the networking industry is beginning to slow.

The merged company would retain the Ascend name and headquarters. Mory Ejabat would remain president and chief executive and Bob Dahl would continue as Ascend chief financial officer.

Cascade President and Chief Executive Dan Smith would become an executive vice president of the merged company. Gururaj Deshpande, Cascade executive vice president, would keep his title at Ascend.

Under terms of the agreement, each share of Cascade common stock will be exchanged for 0.7 share of Ascend common stock. When the transaction is completed, Ascend shareholders will own about 65% of the company, and Cascade shareholders will own the remainder.

Ascend said it expects to take a charge related to the acquisition in the third quarter, after the transaction closes.

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