DragonWave to acquire Nokia Siemens microwave

Canada-based DragonWave Incorporated has confirmed plans to acquire Nokia Siemens Networks’ microwave transport business, comprising its associated operational support systems (OSS) and related support functions, just as the deal would be closed in first quarter of next year, 2012.

Head of Network Systems, Nokia Siemens Networks, Mr. Marc Rouanne, confirmed this development, saying that under the terms of “Master Acquisition Agreement” signed on Monday between the two entities, as well as acquiring the business, DragonWave would become the preferred, strategic supplier to Nokia Siemens Networks of packet microwave and related products, and the companies would jointly coordinate technology development activities.

He also said that the planned transaction is subject to any applicable regulatory, exchange and third party approvals, a consultation process with trade union representatives, and other customary terms and conditions.

He noted that Nokia Siemens Networks and DragonWave believe the proposed acquisition and supply agreements would accelerate innovation in backhaul products, supporting world class microwave solutions for mobile operators.

He disclosed that the companies aim to complete the planned acquisition and supply agreements in the first quarter 2012, when the deal would be formally closed.

According to him, following the proposed acquisition, Nokia Siemens Networks would retain responsibility for its existing solution sales and associated services for microwave transport, while DragonWave would be responsible for the product line, including Research & Development, product management and operations functions.

“Through this strategic relationship, customers would continue to receive high-quality services and sales support from Nokia Siemens Networks, while DragonWave’s best of breed products would ensure they have access to industry leading technology,” said Marc Rouanne, head of Network Systems, Nokia Siemens Networks. “Our intention is to capitalize on DragonWave’s proven capabilities for innovative product development and focus on our end-to-end solutions.”

For Mr. Peter Allen, president and chief executive officer, DragonWave, they are very proud to partner with Nokia Siemens Networks.

“We hope to welcome new employees as a valuable addition to the DragonWave team,” he said, pointing out that this relationship is transformational, and gives his firm the ability to serve customers who want to access an integrated solution.

Additionally, he said, the partnership provides DragonWave an expanded technology base to address those customers who wish to purchase stand-alone best-in-breed products.

“Our increased scale, diversity and customer footprint, coupled with significantly enhanced resources and capabilities, will provide a solid foundation for faster innovation and broader market penetration,” he said.

The consideration paid by DragonWave on closing, he said, would include approximately 10 million Euros in cash subject to customary purchase price adjustments and 5 million Euros worth of DragonWave common shares which will be subject to a lock-up agreement restricting sale or disposition of the shares for 24 months.

DragonWave, he further said, would assume employee liabilities of approximately 10 million Euros and will enter into a capital asset lease arrangement for approximately 5 million euros.

He explained that the terms of the Master Acquisition Agreement also provide for sales performance based earn-out payments to be made following closing of the deal after the first quarter of 2012.

ITRealms Online gathered that the hardware and basic software earn-out period runs for 18 months following closing and the earn-out period on application software upgrades runs for four years following closing.

“The earn-out payments could raise the value of the transaction by approximately 80 million euros,” he said.

Remmy Nweke
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