Merger mania , 3Com snatches up OnStream

3Com Corp. last week acquired OnStream Networks, a wide area network access company, in order to develop a stronger presence in the carrier market.

3Com, an internetworking firm, picked up OnStream for $245 million, based on 3Com's Oct. 4 closing stock price. 3Com will exchange 3.8 million shares and options for all outstanding shares and options of OnStream.

The acquisition gives 3Com access to a new market space, said Greg Rossmann, senior associate at Broadview Associates, a Fort Lee, N.J.-based investment banking firm that specializes in information technology. OnStream's products are deployed in carrier and private networks, making it an ideal acquisition for 3Com, which is trying to beef up its carrier presence while still tending to the needs of its customer base.

"OnStream is delivering three products today that we can take to the market immediately," said Andy May, vice president and general manager at 3Com. The companies, both based in Santa Clara, Calif., have signed an OEM agreement that will allow 3Com to immediately resell OnStream's product line.

The deal is pending regulatory approval but is expected to close at the end of November.