Lucent may announce purchase of Ascend today

Data networking deal valued at $19.3 billion

January 13, 1999|By NEW YORK TIMES NEWS SERVICE

Lucent Technologies Inc. is expected to announce today that it is acquiring Ascend Communications Inc., the data networking company, in a deal valued at $19.3 billion, people close to the talks said last night.

The board of Lucent, the telephone equipment maker, approved the acquisition yesterday. Ascend's board, which was still discussing the deal late last night, was expected to approve it as well, a person close to Ascend said. But as with all negotiations, a deal could still fall apart until the board approves it.

Ascend, which is based in Alameda, Calif., but also has significant operations in Boston, is expected to be absorbed into Lucent's data services business with Lucent's headquarters remaining in Murray Hill, N.J. Mory Ejabat, Ascend's president and chief executive, will stay on through the transition, a person close to the talks said.

In the deal, Ascend stockholders will receive 0.825 share of Lucent for each of their shares. Based on Lucent's closing price yesterday of $107.875, that would value the offer at $89 a share, or a premium of 19 percent.

The impending Ascend-Lucent announcement has drawn little reaction from analysts because the two companies have been talking on and off for more than 1 1/2 years.

"This has been the deal Ascend has been talking about for months," said Kevin Slocum, an analyst at Soundview Technology Group. "Now the financial community gets the deal, and it's like, whatever."

Not for Lucent. It stands to benefit the most from the combination. The move is necessary because, with Ascend's products, the company will be more able to compete against rivals such as Cisco Systems Inc., the data networking company based in San Jose, Calif.

For months, Ejabat had insisted that his company could go it alone and do battle with bigger rivals. But, Slocum said, "Ascend knew it needed a partner to be a bigger player."

A deal between the two companies started to come together over the past couple of weeks. Richard McGinn, chief executive officer of Lucent, is said to have worked out much of the details himself with Ejabat.

Pub Date: 1/13/99

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