Tellabs to acquire Vivace Networks

Tellabs plans to acquire privately held Vivace Networks, a 4-year-old developer of multiservice IP edge switches, for $135 million in cash and employee stock options.

Tellabs plans to acquire privately held Vivace Networks, a 4-year-old developer of multiservice IP (Internet Protocol) edge switches, for $135 million in cash and employee stock options.

The move brings two complementary new products to Tellabs and enables the company to expand into the global service provider edge router and switch market, estimated to be worth $3 billion in 2003 and $5 billion by 2005, according to industry analyst Infonetics Research.

Tellabs’ acquisition of Vivace Networks is expected to close in the third quarter, subject to Hart-Scott-Rodino and Vivace stockholders’ approval. Tellabs plans to retain Vivace Networks’ employees and offices in San Jose, CA. Ken Koenig, chief executive officer and co-founder of Vivace Networks, will become Tellabs senior vice president, advanced data products, and report to Ed Kennedy, president of Tellabs North America.

With the addition of Vivace, Tellabs will be able to offer telecom service providers a global transport and data solution to address Layer 1, 2 and 3 network applications. Vivace is currently shipping two multiservice IP switches for the edge of the network that complement the Tellabs 5000, 6000 and 7000 series of transport and access systems. Combining Tellabs and Vivace products enables data solutions that collectively manage traffic at Layers 0/1 of the network (the physical layer) and seamlessly pass these services to data networking elements that operate at Layer 2 (data link layer) to Layer 3 (network layer).

Tellabs transport and access products provide a complete bandwidth management solution in metro and regional networks. Vivace Networks’ multiservice IP switches combine native Layer 2 switching and Layer 3 routing capabilities, enabling Frame Relay, ATM, Ethernet and IP services to be transported over an MPLS (Multi-Protocol Label Switching) core network.

Together, the Tellabs and Vivace products will allow service providers to migrate their existing Frame Relay and ATM data networks to the new IP and MPLS services.

Vivace Networks’ Viva Multiservice IP switch family is made up of two carrier-class systems. The Viva5100 Multiservice IP Switch offers over 3000 DS-3 interfaces and 320 Gbps of full-duplex switching capacity in half a rack, making it suited for larger central offices. The Viva1050 Multiservice IP Switch is a service edge switching platform that provides up to 16 Gbps of port density in a compact form factor ideal for small COs or points-of-presence (POPs), as well as carrier-owned customer-premise or multi-tenant building locations. Tier 1 carriers in both the United States and Asia have deployed Vivace products.

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