The networking company today announced it will acquire software maker Epicon for $275 million in stock.
Epicon creates software that helps application service providers install and manage software on desktops tied to a central server.
Customers pay outside providers to run everything from complicated enterprise software installations to more common desktop applications, which are often difficult to maintain.
Though the ASP market is still in its infancy, it is expected to grow to $2 billion by 2003, according to market research firm International Data Corp.
Based in Chelmsford, Mass., Epicon was founded in 1997 and has 60 employees. It has both enterprise and service provider customers. The company will become part of Nortel's ASP Market business unit.
Nortel owns 9 percent of Epicon after taking a minority stake last year.
Today's acquisition is expected to close late in the third quarter or early in the fourth quarter of 2000 and is subject to customary regulatory approvals and approval by Epicon's shareholders.
The transaction is expected to be neutral to Nortel earnings per share from operations in 2000 and 2001. The deal is based on pricing Nortel common shares around $55.15. Nortel will issue about 4.99 million shares on a fully diluted basis. The company's stock yesterday closed up $3.06, or 5 percent, at $63.56.