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Madge deal leaves Olicom with two legs to stand on

Madge deal leaves Olicom with two legs to stand on

Madge Networks' acquisition of Olicom's token ring business has left the local operations of the incumbent with literally two legs to stand on.

Claus Hansen, Olicom's Australia and New Zealand managing director, is now the only employee in the Asia-Pacific. The company previously had around 10 staff in the region.

"[The other APAC employees] have all been offered new jobs with Madge or we have been forced to fire them," he told ARN LiveWire yesterday.

Madge division Madge.connect has made an up-front cash payment of $US15 million and will provide additional cash payments over the next three years based on Madge's Token-Ring revenue performance.

As a result, the company has scored certain Olicom Token-Ring inventory in the quarters following the sale, plus all the intellectual property and the rights to manufacture, sell and develop Olicom's Token Ring product portfolio.

"From today, Olicom does not sell token ring," Hansen said.

Hansen will continue to work for the company, but will keep a close watch on the company's moves over the coming months.

"We are negotiating with other parties with regards to other technologies," he explained, indicating Olicom may be in negotiations for the sale of its ATN and Ethernet products.

"If you ask me if Olicom will retain its brand, the answer is yes until further notice," he said.

Ian Lisle, Madge's APAC sales director, said it will be "business as usual" for the local Olicom channel.

Lisle said he will visit local channel partners on Monday next week to explain the new structure, but indicated customers will still be able to buy Olicom product as usual.

"We don't want to damage the (Olicom) channel relationships," he said.

Lisle is currently in Japan meeting with Olicom officials and the local channel.

He said the deal will give the company a $US500 million slice of a market worth $US1.4 billion that supports around 20 million token ring users worldwide.

He explained it would have been a mistake if Madge bought more than the products that were core to Madge's strategy.

The transition will take between four and five months, according to Lisle.


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