ADVA Optical Networking acquires Ethernet start-up company

July 26, 2004 Martinsried/Munich, Germany and Mahwah, NJ--ADVA Optical Networking today announced the signing of a definitive agreement to acquire the remaining 70% ownership stake in privately-held Metro Packet Systems Inc., an Ethernet start-up company.

Jul 26th, 2004

July 26, 2004 Martinsried/Munich, Germany and Mahwah, NJ--ADVA Optical Networking today announced the signing of a definitive agreement to acquire the remaining 70% ownership stake in privately-held Metro Packet Systems Inc., an Ethernet start-up company. The team of nine engineers at Metro Packet Systems possesses extensive knowledge and expertise in the area of carrier-class Ethernet technology, particularly systems targeted at metropolitan access networks and customer premise sites. This acquisition underscores ADVA's commitment to building up a second core business around Ethernet access solutions.

ADVA initially purchased a 30% stake in Metro Packet Systems in September 2003. Metro Packet Systems played an important role in the development of ADVA's Fiber Service Platform (FSP) 150 product lines, carrier-class native Ethernet access equipment, which was first launched in March 2004.

Under the terms of the agreement, ADVA will acquire the remaining 70% stake for a total purchase price of approximately EUR 4.1 million (based on the XETRA closing price of ADVA on July 23, 2004). The purchase price will be paid in 872,093 shares of common stock in ADVA via a capital increase to be issued in exchange for all outstanding shares of Metro Packet Systems. A further cash earn-out position of up to EUR 4.5 million may be paid based upon achievement of specific sales targets in 2005 for products developed by Metro Packet Systems.

This acquisition is subject to various standard closing conditions, and is anticipated to close in the third quarter 2004. Metro Packet Systems will be fully integrated into ADVA's engineering organization. Lars Ramfelt, chief executive officer of Metro Packet Systems, will become a vice president of technology strategy at ADVA.

Brian L. Protiva, ADVA's chief executive officer, stated, "As today's lowest-cost, highest-volume technology, Ethernet is clearly the dominant local networking technology for enterprise networks and the most attractive target for new services offered by many carriers. Industry analyst Mark Lum estimates that Ethernet services in Europe alone will grow from 6% of the entire EUR 27 billion business data services market in 2002 to 17% in 2005. We are therefore building a second core business around this significant market opportunity, ­ acquiring a talented, experienced group of engineers from Metro Packet Systems is a strategically important step in this process."

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