ADVA Optical Networking to acquire Covaro Networks
Oct. 18, 2005 - Move is designed to provide a complement to the ADVA Fiber Service Platform.
ADVA Optical Networking has announced the signing of a definitive agreement to acquire all material assets in privately-held Covaro Networks Inc., an Ethernet solutions company based in Richardson, TX.
Covaro is a vendor of intelligent Ethernet demarcation products for Ethernet wide area network (WAN) applications that enable service providers to offer intelligent Ethernet services over fiber, copper, SONET/SDH, DS3/DS1 and E3/E1. ADVA Optical Networking representatives say Covaro will provide a complement to the ADVA Fiber Service Platform (FSP), expanding the features and functionalities of ADVA's Ethernet access solution.
Under the terms of the agreement, ADVA will acquire all material Covaro Networks Inc. assets via a combination of shares and cash. A price component of $15 million will be paid in 2,024,190 to-be-issued shares of ADVA common stock via a capital increase.
Thirty-five percent of these shares will be tradable immediately upon issuance, and the remaining new shares will be subject to various lock-up provisions. A second price component of approximately $4 million will be paid in cash. Furthermore, an earn-out of up to $5 million may be paid in cash based on achievement of specific sales and gross margin targets in the fourth quarter of this year and Fiscal 2006 for products developed by Covaro.
The acquisition is subject to various standard closing conditions and is anticipated to close in January 2006. A majority of Covaro's more than 50 employees will be fully integrated into ADVA's North American organization and its Richardson engineering facilities will become an additional ADVA site.
ADVA Optical Networking is based in Munich, Germany. For more information visit www.advaoptical.com.