8 April 2003 Minneapolis, MN Lightwave--Storage networking provider CNT has signed a definitive agreement to acquire Inrange Technologies Corp., developer of high-availability Fibre Channel switching for enterprise connectivity and storage networking solutions, in an all-cash transaction valued at approximately $190 million, or $2.31 per Inrange share. CNT and SPX Corp. have entered into an agreement whereby SPX will sell its approximately 91% interest in Inrange to CNT. The remainder of the shares will be acquired at the same price by a merger immediately following the acquisition from SPX. The boards of directors of CNT and SPX have unanimously approved the agreement.
Upon completion of the acquisition, CNT will be one of the largest providers of complete storage networking products, solutions and services, says the company, with 2002 pro-forma annual revenues of approximately $435 million.
The transaction, which is subject to antitrust clearance and customary closing conditions, is expected to close in the second quarter of 2003.
CNT expects the acquisition to be accretive to earnings per share by at least 10 percent in 2003 and to achieve annual cost savings of between $10 and $15 million to be fully phased in by early 2004.
"This is a compelling acquisition which significantly broadens and strengthens CNT's portfolio of storage and networking products and solutions, expands our customer base, and provides us with significant scale and cost reduction opportunities," contends Thomas G. Hudson, chairman, president, and chief executive officer of CNT. "With Inrange, CNT will continue to offer an integrated product line of Fibre Channel Directors over a wide area network and will be a full-service solutions provider in the industry. This is exactly what enterprise customers need as a partner in the complex decision-making, large scale implementation, and management of multi-vendor storage networking solutions," he adds. "At a fair valuation, our shareholders will own an expanded global company with greater liquidity and enhanced growth opportunities."
The strategic acquisition of Inrange, which recorded 2002 revenues of $223.6 million, expands and complements CNT's existing portfolio of storage networking solutions and increases its global size and scope. Inrange's Fibre Channel switches, storage networking, and WDM products are a strong fit with CNT's storage solutions offerings, which include ESCON, SCSI, and Fibre Channel-based IP and wide area network products, consulting, design, implementation and network monitoring services, and third party storage product integration. The combined entity will have a recurring maintenance revenue stream of nearly $100 million and a $60 million consulting and professional services division.
CNT's senior management is preparing a detailed integration plan and will work to realize substantial synergies at the combined company, which include eliminating duplicative costs, integrating product services offerings, achieving operating efficiencies, and enhancing productivity.