Zhone Technologies, DASAN Network Solutions to merge

Zhone Technologies, Inc. (NASDAQ: ZHNE) will merge with fellow access and enterprise systems supplier DASAN Network Solutions, Inc., a wholly owned subsidiary of DASAN Networks, Inc. The stock-based transaction will result in DASAN Networks holding 58% of the merged company, which will be called DASAN Zhone Solutions, Inc.

Zhone Technologies, Inc. (NASDAQ: ZHNE) will merge with fellow access and enterprise systems supplier DASAN Network Solutions, Inc., a wholly owned subsidiary of DASAN Networks, Inc. The stock-based transaction will result in DASAN Networks holding 58% of the merged company, which will be called DASAN Zhone Solutions, Inc.

The companies did not immediately place a value on the transaction.

Both Zhone and DASAN Network Solutions supply PON and DSLAM hardware for access networks as well as equipment for mobile backhaul (see, for example, "Zhone Technologies unveils MXK-F PON aggregation platform" and "New Knoxville Telephone selects DASAN for GPON FTTH"). DASAN Network Solutions also offers Ethernet switches and aggregation platforms as well as G.fast gear. DASAN Network Solutions also offers mobile fronthaul and wireless systems, while Zhone has applied its PON expertise to passive optical LANs.

"This decision was made as a global expansion plan for both DASAN Networks and Zhone Technologies. Now, by combining forces, DASAN Zhone Solutions has a strong foothold in every continent, and can reach customers all around the globe. The M&A between the two companies will become a major turning point, and the North American market will become the main market for DASAN Zhone Solutions," said MinWoo Nam, CEO of DASAN Networks. "By combining the strengths of both companies, DASAN Zhone Solutions will become one of the top five network solution providers."

"The merger of Zhone and DASAN Network Solutions will immediately position our company as a leading provider of broadband access, mobile backhaul, Ethernet switching, and passive optical LAN solutions," stated Jim Norrod, CEO of Zhone Technologies. "We will expand our customer base around the world and take advantage of greater economies of scale in manufacturing, support, and engineering."

The companies expect to conclude the deal in the third quarter of this year. DASAN Zhone Solutions, Inc. will have a pair of co-CEOs, one each from Zhone and DASAN. DASAN will appoint four directors to the merged company's board and Zhone will name three.

The new company – which DASAN Networks says it will operate as a subsidiary – will be headquartered in the U.S. It will have engineering facilities in Oakland, CA; Largo, FL; Alpharetta, GA; Chennai and Bengaluru, India; Seoul, Korea; Hanoi, Vietnam; and Jilin, Xian, and Shenzhen, China. It will manufacture its products via a combination of Zhone's internal manufacturing assets in Largo and contract manufacturing in China.

The common stock of DASAN Zhone Solutions will trade under the ticker symbol DZSI on the Nasdaq Capital Market.

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