Nortel continued its rapid-fire acquisition drive yesterday with a stock deal valued at about $7.3 billion (€7.81 billion) to buy Web switch developer Alteon WebSystems.
Nortel, the world's second network equipment supplier, said Alteon's technology will help it build sophisticated communications systems that deliver content over the Internet at unprecedented levels of speed and reliability.
"What we saw was tremendous value for the two coming together," said Nortel chief operating officer Ms Clarence Chandran.
Investors did not appear equally impressed, with the shares dropping in Canada and in New York, initially.
The market decline sent down the value of the deal, which was initially announced at $7.8 billion when calculated on Nortel's New York closing price of $78 5/8 on Thursday.
Ontario-based Nortel said it will offer Alteon shareholders 1.83 common shares for each Alteon share in the agreement, which it expects to close in the fourth quarter.
Analysts pinned the stock's slide largely on rate worries after the release of unexpectedly robust US economic growth numbers as well as the failure of talks on selling Nortel's fibre-optic parts unit to Corning.
Nortel, which has substantial operations in Ireland, said the Alteon acquisition will be neutral to its financial performance in calendar 2000 and add slightly to its profit in calendar 2001.
California-based Alteon develops switches that use sophisticated traffic control techniques to speed up the servers that feed data into networks and websites.
