Ciena acquires WaveSmith

Ciena announced yesterday that it has reached an agreement to acquire WaveSmith Networks, a provider of multiservice switching products aimed at the carrier market.

Under the terms of the agreement, Ciena will exchange 36 million shares of its common stock for all outstanding shares of WaveSmith stock and all options held by WaveSmith employees. The value of the purchase is $158 million, which is net of an investment Ciena made in WaveSmith last October.

Along with that investment came a reseller agreement with Ciena, under which Ciena was able to sell WaveSmith’s DistributedNoted product line to tier-one carriers worldwide.

According to Gary Smith, Ciena’s CEO, WaveSmith’s product line fits in nicely with Ciena’s portfolio and goal of moving “out, up and across incumbent carriers’ networks.”

WaveSmith, in fact, recently landed a significant incumbent customer win, contracting with SBC Communications to provide multiservice switches for DSL aggregation at 200 sites across the country.

This contract, along with other customer wins, played a role in Ciena’s decision to acquire the vendor.

“WaveSmith has already demonstrated solid traction with several customers, they are deployed in several regional networks and most recently announced a contract with at SBC,” said Smith. “This traction in part drove our thinking about this acquisition.”

Ciena expects the purchase to qualify as a tax-free reorganization and is aiming for it to close by the end of July.