Zhone Technologies Inc. today will acquire metro-optical transport and access vendor Sorrento Networks Corp.
“This acquisition positions Zhone as a leading provider of access and metro-optical transport solutions to telecommunications and cable operators worldwide,” says Mory Ejabat, chairman and CEO of Zhone. “This transaction expands Zhone’s presence among both telephone carriers and cable MSOs as their needs converge towards packet-based voice/data/video total-delivery systems. Combining the two businesses extends Zhone’s solution offerings to include metro-optical transport for our telecom carrier customers and allows us to market our VoIP and access solutions into the cable MSOs. Aadditionally, we anticipate that, excluding any acquisition related charges, the acquisition will be immediately accretive and will provide for substantial cost savings from the reduction of operating expenses.”
The acquisition of Sorrento expands Zhone’s substantial customer base with the addition of some of the world’s largest cable operators and carriers while at the same time bringing Zhone’s current customers advanced new access and transport offerings. Sorrento’s product portfolio has immediate application at both existing accounts as well as in greenfield deployments by delivering converged VoIP, broadband access, video services and transport protocols over their existing infrastructures.
Under the terms of the agreement, Zhone will issue .9 of a share of Zhone common stock for each outstanding share of Sorrento common stock, and each option, warrant and other security exercisable or convertible into Sorrento common stock will be assumed by Zhone and become exercisable or convertible into Zhone common stock, with appropriate adjustments based on the merger exchange ratio. The proposed stock-for-stock transaction is intended to qualify as tax-free to the stockholders of Sorrento.
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