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Nortel snaps up Coretek for $1.43B

In another optical networking purchase, Nortel Networks (NYSE: NT) said Tuesday it plans to buy CoreTek, a pioneer in strategic optical components, for up to $1.43 billion.

Shares in Nortel closed at 126 3/16 Monday, continuing their steep ascent.

CoreTek's tunable lasers and other next-generation optical components will strengthen Nortel Networks offerings for an all-optical Internet. CoreTek makes tiny, movable mirrors that alter the wavelength of light as it travels through a network. The products aim to improve the speed, performance, quality and economics of the Internet.

Nortel, a data and telephony networking company, has gone on a buying spree in its effort to become a leader in optical networking. It snapped up Xros (pronounced KY-ROS), a photonic switching company, for $3.25 billion March 14. Nortel said CoreTek's technology will complement the proposed acquisition of Xros, as well as its recent acquisition of Qtera.

Under the terms of the deal, a portion of the shares to be exchanged are contingent upon CoreTek achievements. Based upon a Nortel Networks share price of $119.75, the acquisition will result in Nortel Networks issuing about 8.9 million shares on a fully diluted basis at closing. Up to an additional $361 million in shares would be issued upon CoreTek achieving certain milestones.

The transaction, expected to close in the second quarter of 2000, is expected to be marginally dilutive to Nortel Networks earnings per share in calendar year 2000 and accretive in calendar year 2001, excluding acquisition-related charges, the company said.

Nortel added that the acquisition will not impact its previously-announced financial guidance.