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Redback to acquire start-up for Net services

The company plans to buy Abatis Systems for $636 million in order to build Internet-based services, such as videoconferencing and movies on demand, into its networking equipment.

    Redback Networks plans to acquire start-up Abatis Systems for $636 million in order to build Internet-based services, such as videoconferencing and movies on demand, into its networking equipment.

    Redback will issue about 5.2 million shares to buy Abatis, a 2-year-old company in Vancouver, British Columbia, with about 130 employees.

    Sunnyvale, Calif.-based Redback builds networking equipment that allows telecommunications carriers and Internet service providers to offer high-speed Net access, such as digital subscriber line (DSL) and cable.

    Redback chief executive Vivek Ragavan said the acquisition gives the company the technology it needs to allow service providers to offer and manage Web-based services. These include movies, music and games on demand for consumers, as well as video conferencing and Virtual Private Networks for businesses.

    Redback is one of the early market leaders in high-speed Internet access equipment, but other networking firms have begun tackling the market, including Cisco Systems, Nortel Networks, Lucent Technologies and Alcatel.

    Last week, Lucent spent $1.3 billion for Spring Tide Networks, a similar maker of Internet-services equipment.

    Redback executives said the acquisition also fits into the company's new strategy in the emerging market of constructing metropolitan networks, or fiber-optic networks within big cities. Redback spent $4.5 billion last year to acquire Siara Systems, which makes technology that ties older metropolitan networks to Net-based services.