Nortel Networks Corp. intends to purchase Promatory Communications Inc., a California-based developer of DSL (digital subscriber line) platforms, for an estimated US$778 million in Nortel common stock, the Canadian company announced yesterday.
Buying Promatory will enable Nortel to offer high-speed Internet access to both business and home phone users, Nortel said in a statement.
The acquisition will consist of an estimated $705 million in Nortel common shares to be paid on closing the deal, plus a possible additional $73 million in shares contingent upon Promatory fulfilling a number of performance objectives this year, Nortel said.
The deal, subject to regulatory and shareholder approval, is expected to close this quarter, Nortel said.
Should the deal go ahead, Promatory's President Roger Dorf will become vice president of a new business unit of Nortel, reporting to Don Richmond, vice president and general manager of Nortel's access solutions unit.
Promatory creates custom-designed services for business and residential users using DSL technology, allowing ordinary copper wiring to carry Internet traffic at speeds far greater than conventional modems.
Fremont, California-based Promatory's broadband access platform currently delivers DSL for businesses, and Nortel plans on using the platform to enhance its voice-over-DSL service, which allows users to use the same copper wires for Internet services and voice communication simultaneously.
Promatory already has DSL projects in Singapore, Hong Kong, China and Taiwan, and works with system integrator partners in Japan, South Korea, Taiwan, Hong Kong, Australia and New Zealand. The company moved into the Asian DSL market in May of last year. [See "Promatory Seeks to Tap Asian DSL Demand," May 13,1999.]Nortel, in Brampton, Ontario, is at +1-905-863-0000 or at http://www.nortel.com/. Promatory, based in Fremont, California, can be contacted at +1-510-445-3855 or at http://www.promatory.com/.