The consolidation factor

Western Multiplex, Adaptive Broadband create fixed wireless one-stop shop

Broadband fixed wireless vendors Western Multiplex and Adaptive Broadband have similar strategies. Both plan to consolidate the broadband fixed-wireless market to create the technological scale necessary to meet market demand for integrated products and vendor stability. With that goal in mind, last week they joined forces in an all-stock merger worth $645 million.

Under terms of the agreement, which is expected to close in first quarter 2001, Adaptive Broadband will become a wholly owned subsidiary of Western Multiplex. The combined company will offer point-to-point and point-to-multipoint products for last-mile access, campus and enterprise connectivity and wireless-access backhaul.

"The combined company is to become the broadest broadband company in the world," said Jonathan Zakin, chairman and CEO of Western Multiplex. "The acquisition is a great fit for both companies because we are combining Adaptive's point-to-multipoint solutions and our point-to-point."

Beyond technology, the companies share a common culture.

"We believe the two companies are very compatible from a cultural standpoint. It is a perfect marriage because both companies have management that has a history of doing acquisitions," said Frederick Lawrence, chairman and CEO of Adaptive Broadband. "This merger has tremendous opportunity for fastforwarding our strategy [in pursuit of] an even broader product line and different geographies."

Growth in the fixed wireless market has sparked an increase in the number of large and small vendors developing customer solutions. According to The Strategis Group, as these vendors' shipments increase and equipment prices fall, fixed wireless could become even more competitive in the near future. Despite growth expectations and new vendor entrants, there seems to be an industry push toward consolidation, one that caught Western Multiplex and Adaptive Broadband by the collar.

"To consolidate this fragmented industry, we decided we needed a multichannel strategy," said Amir Zoufonoun, president and chief operating officer of Western Multiplex.

"We felt Adaptive Broadband was a leader in this and the license-free space and would be a perfect fit," he added. "To be a leader in an industry, a company has to work on all fronts."

It was not until Western Multiplex separated from parent company Glenayre last year that it was able to jumpstart its acquisition strategy, intended to help it become a leader in the fixed wireless broadband industry, Zoufonoun said. Previously, the company was limited by Glenayre's stronger focus on its core paging technology, which left little time for looking into new markets.

Western Multiplex now is determined to work in a variety of arenas.

"We decided not to focus solely on any one market," Zoufonoun said. "We believe it is dangerous to pick one camp and stick to it for the long term. We are building a platform that allows for consolidation, which the industry is ripe for."