Frame Relay pioneer StrataCom Inc seemed to stumble after its stellar early success, which saw Digital Equipment Corp taking a minority stake to seal a marketing deal, and the networking business is so competitive that one stumble means that if you still have anything worthwhile to offer, you’ll be expensive lunch for one of the surer-footed players. That was the fate that befell StrataCom yesterday as Cisco Systems Inc persuaded it to recommend an exchange worth at least $50 a share, to value StrataCom at a startling $4,000m.The deal is either one Cisco share or Cisco shares worth $50 a time, whichever is the greater, to a maximum of 1.22 shares per share. It represents an $11.25 premium on Stratacom’s Friday closing price. Where Cisco is focused primarily on local area networks, StrataCom’s Frame Relay and Asynchronous Transfer Mode networks are used to build wide area networks, and the deal as enabling Cisco to offer end-to-end communications embracing the entire spectrum of products. Bay Networks Inc, 3Com Corp and Cabletron Systems Inc are expected to start looking at the likes of Newbridge Networks Corp and Cascade Communications Corp and wonder whether they can afford them, or whether they can afford not to buy them.
