Dec, 2001 : Paradyne and Elastic Networks Announce Merger

📅 December 31, 2001 - Paradyne Networks, Inc. and Elastic Networks Inc. have announced they have entered into a definitiveagreement for Paradyne to acquire Elastic. Under the terms of the mergeragreement, Elastic stockholders will receive .199 to .2692 shares ofParadyne common stock for each outstanding share of Elastic common stock,based on the 10-day average closing price of Paradyne common stock prior tothe consummation of the merger. The exchange ratio range may be subject toan adjustment based on the net working capital of Elastic prior to themerger.

Based on the closing price of Paradyne stock on Dec. 27, 2001 ($3.77),Elastic shareholders would receive equivalent value of $0.86 per share inParadyne stock. The transaction is valued at approximately $28.8 million.The merger, which was approved by the boards of both companies, is subjectto stockholder approval at each company and other customary closingconditions. The transaction is expected to be completed in the first quarterof 2002.
Commenting on the proposed merger, Sean Belanger, Paradyne's president andCEO, stated, "The purchase is a natural extension of our DSL productportfolio. This transaction launches Paradyne into the In-Building DSLmarket. Combining Elastic's products with our worldwide channel is a greatfit for this market. Elastic, like Paradyne, has a strong and complimentarybase of Independent Telephone Companies as customers. We expect that thecombination will result in over 200 ITCO customers. Elastic brings greattechnology development in EtherLoop as well as Elastic's 100 MegabitEtherLoop2 to be released in the first half of 2003. We believe the cash andworking capital of Elastic provides the combined companies a strongerbalance sheet. In addition, Elastic's leadership in IP-based, nextgeneration Ethernet broadband access technologies positions Paradyne as akey player in the emerging Ethernet carrier network architectures."
Certain directors and several of the executive officers of Elastic, andElastic's largest shareholder, Nortel Networks Inc., who own approximately14.4 million shares of Elastic common stock (approximately 46% ofoutstanding shares), have agreed to support and to vote in favor of thetransaction at the Elastic stockholders' meeting. Certain of the directorsand executive officers of Paradyne, and certain stockholders associated withthe Texas Pacific Group, have entered into agreements with Elastic tosupport and to vote up to approximately 11.6 million shares of Paradynestock (approximately 35% of outstanding Paradyne shares) in favor of thetransaction at the Paradyne stockholders' meeting.
The proposed transaction will be submitted to Paradyne's and Elastic'sstockholders for their consideration, and Paradyne will file with the SEC aregistration statement containing the joint proxy statement-prospectus to beused by Paradyne and Elastic to solicit their respective stockholders'approval of the proposed transaction, as well as other relevant documentsconcerning the proposed transaction.