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Cabletron spinoff scoops up business-networking company

Enterasys Networks acquires a maker of virtual private network products to boost competition with rivals Cisco and Nortel.

Cabletron Systems spinoff Enterasys Networks today boosted its Internet-based security offerings by acquiring a virtual private networking firm for about $170 million.

Enterasys bought Indus River Networks, maker of virtual private network (VPN) products. The technology gives businesses inexpensive and secure high-speed connections to corporate networks over the Internet.

Enterasys, one of four companies being spun off by parent Cabletron, acquired Indus River for 4.1 million shares of Cabletron stock and some cash. The deal also includes 1 percent of Enterasys stock once the spinoff goes public, Enterasys executives said.

Today's acquisition helps the company better compete against rivals Cisco Systems, Nortel Networks and others that build networking equipment for businesses.

The VPN market is expected to take off as a new way of networking that can save businesses money. Previously, workers on the road had to dial into corporate networks with a special number or over an expensive leased line. With VPNs, that same worker can log onto a network by calling a local Internet service provider number, eliminating the need for expensive calls.

Enterasys executives said Indus Rivers' technology helps the company round out its VPN offerings. Before, Enterasys products only allowed different offices to connect to each other through VPNs. Indus Rivers' product allows telecommuters and mobile workers to use VPNs to connect to the corporate network from home, hotels and small offices, Enterasys executives said. Indus River also offers software that allows businesses to manage VPNs.

Indus River, based in Acton, Mass., is a 5-year-old company with about 60 employees.