Wellfleet Communications Inc, the Billerica, Massachusetts networking equipment manufacturer with the super-fast growth it grew sales 118% to $264m and profits 125% to $41.8m in the first nine months of its fiscal year just ended and $323m in the four quarters to March – is taking advantage of its high rating to swallow SynOptics Communications Inc, Santa Clara, in what is being described as a merger of equals. SynOptics is the bigger company and its sales put on a healthy 81% in 1993, reaching $704m, on which it made $75.9m, but it rather ground to a halt in the first quarter this year, with sales up only 5% at $161m and profits down at $16m. The combined company will climb into the big league with annual sales of well over $1,000m. Welfleet has agreed to pay 0.725 of a share for each SynOptics out, and the two have a lock-out agreement to buy shares in each other representing 15% if a third party tries to muscle in on their menage a deux. Paul Severino, president of Wellfleet, will serve as chairman of the new company, and Andrew Ludwick, president and chief executive of SynOptics will serve as president and chief executive. The aim of the combination is to ally Wellfleet’s routing and wide-area network technologies with SynOptics’s intelligent hub, switching and network management capabilities – which already manage Wellfleet products under an earlier agreement between the two. The two now intend to develop an end-to-end standards-based architecture with jointly-developed new products that combine both routing and switching technologies, capable of integrating existing products from the two and from third parties. The announcement caused a flurry in the share prices of both, and after they settled down, the terms of the deal valued Synoptics at an indicated $1,200m or so.
