Lucent buys LANNet for $US117 million, aims at Europe, Asia

With hopes pinned on expanding in Europe and Asia, Lucent Technologies Inc. said today that it is buying networking switch vendor LANNet for $US117 million.

LANNet, based in Tel Aviv, Israel, is a subsidiary of Madge Networks NV and supplies Ethernet and ATM (asynchronous transfer mode) switches for LANs (local area networks). The deal is expected to be finalized during the quarter ending Sept. 30 and will result in a one-time non-cash charge against Lucent earnings in that quarter.

Lucent will incorporate LANNet products into its portfolio after the acquisition is complete, said Bill O'Shea, president of Lucent's Data Networking Systems group, during a teleconference this morning.

LANNet will continue to operate in Israel, but the company will merge into Lucent's Concord, Massachusetts-based Enterprise Infrastructure Products Group (EIPG), which is part of the data networking unit. Schmuel Levy, chief executive officer of LANNet, will become president of the EIPG Israel Technology Center.

The merger will ensure Lucent's growth in European and Asian markets, Levy said during the teleconference, adding: "We have an exciting future in which we can grow together and become a top player."

Announcements regarding products linked to the merger should come by the end of this year, O'Shea said.

LAN switch networks are growing more than 20 per cent annually, O'Shea said in a statement issued before the teleconference, and the merger means that Lucent will be able to offer a more comprehensive LAN switching product line covering everything from desktop computers to WANs (wide area networks). LANNet's products include Ethernet switches for small workgroups to large-campus LANs, as well as high-capacity ATMs that provide multiple services and Ethernet switches for campus backbones.