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Sonus Networks Announces Definitive Agreement To Acquire Network Equipment Technologies

Stocks in this article: NWK SONS

Sonus Networks, Inc. (NASDAQ: SONS), a global leader in SIP communications, and Network Equipment Technologies, Inc. (NASDAQ: NWK), a leading provider of enterprise-class networking solutions optimized for secure real-time communications in Unified Communications (UC), SIP trunking and Cloud-based deployments, today announced they have entered into a definitive agreement for Sonus to acquire NET in a cash merger. The purchase price of $1.35 per share is valued at approximately $42 million, excluding acquisition-related costs, and is expected to close in the third quarter of 2012, subject to NET stockholder approval, the satisfaction of customary closing conditions and any applicable regulatory reviews. The intended acquisition has been approved by the Board of Directors of both companies.

As a result of the acquisition, Sonus expects incremental revenue of approximately $15 million to $20 million in the second half of fiscal 2012, with the amount recognized dependent upon the timing of the completion of the acquisition. Achievement of $15 million in revenue is expected to have a dilutive impact on GAAP EPS of approximately $0.03 per share in the second half of 2012 and a dilutive impact on non-GAAP EPS of approximately $0.01 per share in the same period. Achievement of $20 million in revenue is expected to have a dilutive impact on GAAP EPS of approximately $0.02 per share in the second half of 2012 and a break-even to slightly accretive impact on non-GAAP EPS in the same period. Non-GAAP EPS excludes certain expenses, including but not limited to, acquisition-related costs, stock-based compensation and amortization of intangible assets.

The planned acquisition is consistent with Sonus’ strategy to extend its capabilities into the enterprise market and is intended to accelerate the company’s ability to deliver an end-to-end portfolio of solutions that enable real-time communications. NET delivers high performance networking solutions optimized for those enterprise locations where secure UC, SIP trunking and Cloud-based networking features are required. The combination of Sonus’ SBC portfolio and NET’s network appliance portfolio is anticipated to provide enterprises with a seamless mediation platform that extends from the core to the edge of their network.

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