3Com has announced it plans to buy OnStream Networks for $US224 million to better its position as the world's second largest networking company. OnStream provides ATM and WAN access products and will now become the broadband access division of 3Com's WAN operations.
The new addition will allow 3Com to offer customers standards-based, cost-effective solutions for integrating legacy traffic from multiple data, video and voice networks, and adapting this traffic to ATM for transport over local and wide area networks.
3Com sources cited the growing enterprise trend towards high performance ATM switched networks and the demands of ISPs and NSPs for standardisation as strong reasons for the takeover.
"This is a strategic acquisition for 3Com in the WAN access space, allowing us to continue driving toward complete leadership in supplying wide-area networking solutions for both the enterprise and NSP customers," said Eric Benhamou, chairman and chief executive officer of 3Com.
"With the addition of OnStream, 3Com will continue to develop open networking platforms remaining committed to its vision of interoperability with the installed base of networking equipment," Benhamou said.
Under the terms of the agreement, 3Com will exchange 3.8 million shares and options to purchase its shares for all outstanding shares and options of OnStream. As part of the agreement, both companies have signed an OEM agreement that will allow 3Com to immediately purchase and resell OnStream's ATM and other broadband product lines.