DragonWave Inc. plans is set to acquire Nokia Siemens Networks’ (NSN) microwave transport business, including its associated operational support systems (OSS) and related support functions.
Under the deal, DragonWave would become the preferred, strategic supplier to NSN of packet microwave and related products while the companies would jointly coordinate technology development activities.
The acquisition is expected to accelerate innovation in backhaul products, supporting world class microwave solutions for mobile operators, with the deal expected to be concluded by the first quarter of 2012.
NSN would however retain responsibility for its existing solution sales and associated services for microwave transport, while DragonWave would be responsible for the product line, including R&D, product management and operations functions.
“Through this strategic relationship, customers would continue to receive high-quality services and sales support from NSN, while DragonWave’s best of breed products would ensure they have access to industry leading technology. Our intention is to capitalize on DragonWave’s proven capabilities for innovative product development and focus on our end-to-end solutions,” said Marc Rouanne, head of network systems at NSN in a release.
DragonWave is to pay approximately 10 million Euros in cash and 5 million Euros worth of DragonWave common shares. DragonWave will also assume employee liabilities of approximately 10 million Euros and will enter into a capital asset lease arrangement for approximately 5 million Euros. The terms of the Master Acquisition Agreement also provides for sales performance based earn-out payments to be made following closing. 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.
DragonWave expects to finance the transaction through a combination of cash on its balance sheet and increased debt facilities provided by Comerica Bank and Export Development Canada. Such debt facilities are subject to conditions and will be entered into on, and subject to, closing of the acquisition.
The planned deal would substantially broaden and strengthen DragonWave’s product presence in major mobile operators throughout the world through NSN’s extensive global sales channel. As part of the proposed acquisition, the companies expect approximately 360 NSN employees, mainly based in Milan, Italy and Shanghai, China, to transfer to DragonWave.