NEWSFLASH - Alcatel buys Xylan

Fast-growing networking vendor Xylan has been acquired by Alcatel, continuing the trend of telecommunications giants buying their way into the data market.

The $37 a share offer is valued at approximately $2 billion.

Serge Tchuruk, chairman and CEO of Alcatel, said : "The combined Alcatel/Xylan strengths in voice and data networking for enterprises will constitute a very powerful force in world corporate markets."

Xylan has been just about the fastest-growing internetworking player, both worldwide and in Australia, over recent years, but has battled the perception that it is too small and too risky a proposition for many large customers. This acquisition will help it as it battles with giants like Cisco and Lucent.

"In the face of industry giants, Xylan has grown beyond anyone's expectations over the last five years because its offered the best technology available. The synergies from combining that technology with Alcatel's resources will provide a dramatic boost to Xylan's future success," said Steve Kim, president and chief executive officer of Xylan.

This acquisition will be made by a cash tender offer for all outstanding shares. The tender offer will commence by Monday, March 8 and will be scheduled to expire 20 business days thereafter.