Alcatel buys Xylan in $2bn cash deal

NEWS Alcatel is to acquire US internetworking company, Xylan Corporation, for $2bn. The definitive agreement states that the acquisition will be made by cash tender, offering $37 per share. Niall Hickey, spokesman for Alcatel, explained that it has been working with Xylan for four years as an original equipment manufacturer (OEM). He said he believes the move will "bolster the company's presence in the US enterprise market". Hickey commented that Alcatel is already the leader in the European convergence market, with 25 per cent market share. "The move will help Xylan's products reach a global market," he said. Robin Duke-Woolley, principle consultant at Schema was surprised to hear it was a cash deal. He said: "Big money deals have been done in shares and not cash." Duke-Woolley said Alcatel wants to get ahead in the IP/voice/data market and to be successful in the US. "Doing so will hold them in good stead when the European market is on the lookout for a proven supplier." Less than 5 months ago, the French telecoms company paid $315m for Packet Engines, the Canadian Gigabit Ethernet company, to bolster its presence in the networking market.