DragonWave announces amended agreement, closing date with Nokia Siemens Networks
DragonWave Inc. announced that it has reached an amended agreement for DragonWave’s acquisition of Nokia Siemens Networks’ microwave transport business including its associated operational support system (OSS) and related support functions. The amended agreement simplifies the transaction, and is intended to provide both companies with greater flexibility to adapt to changing market environments and enhance the delivery of customer-valued product features. In accordance with the amended agreement the planned closing date is June 1, 2012, subject to closing conditions.
Under the terms of the amended agreement, DragonWave becomes the preferred strategic supplier of packet microwave and related products to Nokia Siemens Networks and the two companies are to jointly coordinate technology development activities. The Nokia Siemens Networks microwave transport assets in Italy, including its employees, will not transfer to DragonWave under the amended agreement. DragonWave is to enter into a services agreement with Nokia Siemens Networks for outsourced R&D, product management, sales support and operations functions. This is aimed at enhancing the ability of DragonWave to continue to deliver on critical customer deliveries. The service agreement contemplates the potential transfer of the Microwave Transport assets in Italy to DragonWave upon its termination.
DragonWave believes the acquisition and associated supply agreements will accelerate innovation in backhaul products, supporting world-class microwave solutions for mobile operators. Nokia Siemens Networks is to retain responsibility for its existing solution sales and associated services for microwave transport. DragonWave will be responsible for developing and manufacturing the microwave transport products.
“DragonWave is pleased and proud to be forming this comprehensive strategic partnership with a recognized world-class solutions provider for mobile broadband networks,” said DragonWave President and CEO Peter Allen. “I am confident that Nokia Siemens Networks’ long-standing, strong relationships with global tier-one mobile operators, combined with DragonWave’s focus and proven capability for delivering innovative packet microwave product solutions will create strategic advantage for both partners and positive benefits to customers, employees and shareholders.
"This strategic partnership is truly transformational for DragonWave, bringing us into key new markets throughout the world,” continued Mr. Allen. “We believe that through this strategic relationship, customers will receive comprehensive, end-to-end solutions comprising high-quality services and sales support from Nokia Siemens Networks and a full portfolio of industry-best products from DragonWave. Our increased scale and customer footprint, and significantly enhanced resources and capabilities all provide solid pillars for rapid innovation and broader market penetration."
The Business is to be acquired through one of DragonWave’s wholly-owned subsidiaries, DragonWave S.à r.l. and other indirect wholly-owned subsidiaries. The purchase price paid on closing will include approximately 11.7 million euros in cash, subject to customary purchase price adjustments, and common shares of DragonWave with a value of 5 million euros which are subject to a lock-up restricting sale or disposition of the shares (subject to customary exceptions). DragonWave will also acquire other assets under a capital asset lease or other deferred sale arrangements with a value of approximately 3.6 million euros. In keeping with the simplification of the transaction, the sales performance based earn-out payments have been eliminated.
DragonWave will finance the transaction through a combination of cash on its balance sheet and increased debt facilities provided by Comerica Bank and Export Development Canada.
The acquisition of the operations in China is expected to be formally completed in the second half of 2012, once all of the licenses and permissions to do so are in place. Approximately 130 employees of Nokia Siemens Networks based in Shanghai would transfer to DragonWave at that time. DragonWave believes that this acquisition provides transferring employees with attractive new opportunities in a solid, technologically advanced company, with its focus on their core areas of expertise.
This transaction is a “significant acquisition” for DragonWave under applicable securities laws and accordingly, DragonWave will file a business acquisition report within the prescribed period.