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Cascade buys ATM help

Looking to broaden its reach into the ATM market, Cascade Communications will acquire Sahara Networks in a $212.8 million stock deal.

Looking to broaden its asynchronous transfer mode reach (ATM), Cascade Communications (CSCC) plucked network conversion device maker Sahara Networks for $212.8 million.

The Wallingford, Connecticut-based Sahara Networks makes hardware called concentrators and multiplexers that can convert data, telephone communications, and video running on a local area network so that it can be moved across a wide area network via ATM. The devices should compliment Cascade's line of frame relay and ATM switches. Many of Cascade's customers are network service providers who will now be able to move customers' local data across a public ATM network in an efficient manner while offering certain quality-of-service guarantees.

A network service provider will also be able to automate the tasks associated with adding new services to a corporate network with the Sahara box, according to Steve Kelly, Cascade's director of product marketing. He said service providers have told Cascade that they want to extend their reach from the central office to the remote site, offering wide-area capabilities to the small office.

"Sahara and Cascade share the same vision of how service providers should build out their networks," Kelly said.

Kelly said the first areas of integration for the two companies will include incorporating the Sahara hardware into Cascade's CascadeView network management software scheme. The next area will be fine-tuning the quality-of-service enhancements now available to Cascade through the highly intelligent Sahara boxes.

The deal is expected to close this month with the acquisition counting as a purchase with a one-time write-off. Cascade's acquisition of Sahara Networks continues a wave of purchases in the networking industry as larger players attempt to fill holes in their product lines with third parties' products.

3Com (COMS) recently filled a similar hole by acquiring OnStream Networks for $245 million.

Sahara Networks was founded in June 1995. The company's 55 employees will be retained, forming a new Broadband Access business unit within Cascade. Sahara's CEO Jonathan Reeves will become Cascade's vice president and general manager of the Broadband Access unit.

Wall Street reacted favorably to Cascade's move. After closing yesterday at 56, the Westford, Massachusetts-based company is up 2-1/4 points in early morning trading today.