Cisco Systems Inc yesterday announced that it would pay $13.35 a share cash, about $200m in all, for modem maker Telebit Corp – but all it really wants is the Chelmsford, Massachusetts company’s Modem ISDN Channel Aggregation technologies, so it is letting the rest of the business go in a management buyout. The managers will form a new remote access products – mainly modems – and services company, which will buy substantially all of Telebit’s assets, other than its patents and Modem ISDN Channel technology. The newly-formed company will assume the name Telebit Corp and will be privately-held. Some 50 Modem ISDN Channel Aggregation development, product management and customer support personnel will become the Dial Technology Division within Cisco’s Access Business Unit and will be based at Cisco’s own facilities in Chelmsford. The division will help Cisco to integrate the features of Modem ISDN Channel Aggregation digital modem technology current and future Cisco products, including the Cisco 2509-2511 access servers and the AS5200 Universal Access Server. Telebit’s new technology, combined with Cisco Internetworking Operating System software and wide area network switching is intended to provide a scalable secure network connection using managed modem technology. The sequence of events is to be that Telebit first sells its analogue modem business, NetBlazer and MicaBlazer products and other assets and liabilities to the new entity formed via the management buyout, for a $31.5m promissory note and $3.5m in redeemable preference shares, whereupon Cisco will buy the remaining Telebit Corp, which will consist of Telebit patents, Modem ISDN Channel intellectual property and personnel, and will assume the $35m financing for the management buyout. Cisco expects to take a one-time charge of between 22 and 25 cents per share next quarter to write off in-process research and development. The new Telebit Corp intends to license Cisco’s newly integrated Modem ISDN Channel development and incorporate it into various local network server technologies, including NetWare, Windows NT and several Unix server types.
