3Com Corporation the world's second largest networking company has signed an agreement to acquire OnStream Networks of Santa Clara, California, for $245 million. The company's ATM activities development will continue at 3Com Israel, formerly NiceCom.
The agreement is expected to close by November 30. In the meantime, the two companies have signed and OEM agreement allowing 3Com to sell OnStream ATM products.
OnStream is a leading provider of Asynchronous Transfer Mode (ATM), broadband wide area network (WAN) and access products.
"This is a strategic acquisition for 3Com in the WAN access arena," said Eric Benhamou, chairman and CEO of 3Com. The driving force behind the acquisition is the desire to become a formidable opponent, in ATM products, to data communications giant Cisco, which acquired StrataCom in April for $4 billion.
The combination of 3Com and OnStream systems will create a cost-effective solution that can aggregate voice, data and video traffic across both LAN and WAN networks. For many customers, these solutions provide a lower cost alternative to competitive ATM LAN and WAN switching products currently on the market.
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. Based upon the closing price of 3Com common stock on Friday, October 4, the transaction is valued at approximately $245 million.