Paradyne acquires Net to Net

Paradyne Networks today said it has agreed to acquire Net to Net Technologies for $3 million in cash and 604,839 shares of Paradyne stock plus a warrant to purchase up to 1,008,065 shares of Paradyne stock at an exercise price of $5.95 per share, which will expire on Dec. 31, 2005.

Paradyne plans to use Net to Net’s Portsmouth, N.H., headquarters a research and development center and expects to retain about 25 employees.

The transaction, which is expected to close in two weeks, gives Paradyne a solid channel into the independent telco market and a strong presence in several European markets, according to Sean Belanger, president and CEO of Paradyne. In a conference call this afternoon, Belanger noted that eight of Net to Net’s top 10 customers are not current clients of Paradyne.

"It’s really a broad base of customers through their channels," he said.

Just as important, the acquisition gives Paradyne a jump-start into the IP DSLAM market, which is becoming increasingly important. Most throughout the world have been deploying pure IP DSLAMs for some time and several U.S. carriers have indicated that they will move more aggressively toward the same technology in the near future.

"These guys are a lot of ex-Cabletron engineers and they’re very IP savvy," Belanger said. "We really like the engineering team and what they’re going to bring to us."

The two companies have some overlapping product, though Net to Net’s focus on the small line-count DSLAMs and bonding technology will fill in gaps in the Paradyne portfolio. Additionally, Net to Net has created a small but profitable niche in selling point-to-point network extension equipment.