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Nortel to buy Cambrian Systems

Nortel moves to acquire Cambrian Systems for $300 million in cash, hoping to bank on a technology that speeds the flow of network traffic.

Nortel Networks today announced it has moved to acquire Cambrian Systems for $300 million in cash, hoping to bank on a technology developed by the privately-held Canadian company which speeds the flow of network traffic between metropolitan areas and the optical Internet backbone.

A portion of the $300 million will be deferred and paid contingent upon Cambrian meeting certain business objectives. The acquisition is expected to close within 30 days, and comes just three months after the acquisition of data networking leader Bay Networks.

"With the acquisition of Cambrian Systems, we're speeding up the on-ramps to the Internet backbone," Nortel vice chairman and CEO John Roth said in a prepared statement. "By eliminating the bottleneck between metropolitan networks and the high-speed fiber optic backbone, we will enable higher speeds and higher reliability with bigger bandwidth and lower cost networking."

Cambrian, based in Kanata, Ontario, has approximately 170 employees primarily based in Canada. The company will remain in Kanata but will receive additional resources from Nortel Networks Optical Network Applications business.

Nortel will combine its optical technology with Cambrian Systems' OPTera product line to deliver a solution for metropolitan applications. The metropolitan area network refers to the links between carrier switching centers, Internet service providers, and corporate networks.

The company is looking to tap into a revenue source with the combined technologies by allowing metropolitan service providers to provide a broad array of new high-capacity data services.

Shares of Nortel closed 1.3 percent higher yesterday. The stock has traded as high as 69.25 and low as 26.81 during the past 52 weeks.

Cambrian hopes to benefit from Nortel's worldwide distribution and brand name in reaching the global market with the OPTera.