Merger makes testing heavyweight

Two testing companies, Wandel & Goltermann Management Holding GmbH and Wavetek Corp., announced a merger last week that will create the world's second-largest producer of testing equipment and the largest company to focus solely on communications testing. The combined business could earn annual revenues of more than $400 million, officials at both companies said.

Wandel & Goltermann, based in Eningen, Germany, focuses on analog and digital telephony, ISDN, enterprise networks and quality-of-service tests for fiber optics. San Diego-based Wavetek produces testing equipment for cable television and wireless communications. The merger will create a powerhouse that can offer customers one-stop shopping for a full range of testing equipment, according to executives at both companies.

"Many of our own customers are merging, and the technology they use is getting more complex," said Wandel & Goltermann CEO Peter Wagner, who will be president and CEO of the combined company. "We've reached a step where we have to be a global supplier and come up with solutions for technology in every area."

Because there is very little overlap between business areas, there will be no need for major restructuring, said Derek Morikawa, chief operating officer of Wavetek and of the newly created company.

Mergers in the testing market make a lot of sense, said Tom Nolle, an analyst for CIMI Corp. Although the variety of technology in the market is expanding, the number of buyers who are "literate" in testing equipment is decreasing. It is more efficient, then, for customers to buy all types of testing equipment from one source. "What we're talking about is a kind of mass-to-survive kind of strategy," Nolle said.

Both companies will retain their own names.