When

BreezeCOM

(Nasdaq:BRZE) CEO Zvi Slonimsky predicted a wave of consolidation in the wireless access industry, he evidently knew he was right about at least two companies.

Today BreezeCOM and

Floware Wireless Systems

(Nasdaq:FLRE) announced their merger in a stock swap. Finalization of the merger is contingent on the approval of their shareholders' assemblies. They expect to complete the deal in the third quarter.

In a conference call today, the two companies said that their expected consolidated sales will be a little below earlier expectations, possibly around $205 million to $210 million for the year.

The two companies' CEOs, Amnon Yacoby of Floware and Zvi Slonimsky of BreezeCOM, will share the top executive position at the company, which will continue to to develop point-to-multipoint access systems.

Each Floware share will be converted to 0.76% of a BreezeCOM share. The merged entity will have 53.3 million shares. BreezeCOM ended trade on Nasdaq last night at precisely $6 per share. Based on that price, the merged company's theoretical value is $320 million. It will also have $220 million cash in hand.

BreezeCOM's shareholders will hold 55% of the merged company's shares equity. But the companies define it as a merger between equals. They have not decided on its name yet.

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The merger makes a lot of sense. But the companies' values have lost so much that only a few months ago, the smaller one Floware was worth more than three times today's value of the merged entity.

The merger makes sense from all perspectives strategically, financially and culturally, said Zvi Slonimsky. "Together we will be able to develop more complete, comprehensive solutions. We'll be better positioned to expand our business and global presence."

Complementary ranges of wireless access solutions

From the technological perspective, both companies are engaged in wireless access systems, but they complement each other rather than compete. "We will be offering a one-stop-shop for broadband wireless access systems," Yacoby says.

BreezeCOM's products target households and small offices (SOHO), while Floware concentrates on enterprises and multi-tenant units.

Still, the companies do have several key customers in common, including the China's fourth-biggest communications provider Datang. The Israeli company

Ofek The New World

, a subsidiary of Eurocom, also buys from both. The merged entity will probably be able to offer more complete solutions to customers like these. Ofek, for one, has already disclosed intentions to purchase point-to-multipoint solutions for low frequency ranges, which is BreezeCOM's forte, and in the high-frequency range of 26 gigahertz where Floware operates.

From the perspective of global presence, BreezeCOM has focused on North and Latin America, and maintains sales offices in Scandinavia and Eastern Europe. Lately the company started operations in Asia too. Floware has relied on telecom system integrators, and also has a strategic alliance with Siemens, which will holds some 10% of the consolidated company. The alliance with Siemens brought Floware sales in Germany, Spain, and other European countries.

The merger was carried out by Salomon Smith Barney, which maintains eight investment bankers engaged solely in M&A and issues of Israeli companies. The bank provides analytic coverage of both shares.