ADVA Optical Networking acquires Covaro Networks
October 17, 2005, Martinsried/Munich, Germany and Mahwah, NJ--ADVA Optical Networking announced the signing of a definitive agreement to acquire all material assets in privately-held Covaro Networks, an Ethernet solutions company based in Richardson, TX. Covaro is a leading vendor of intelligent Ethernet demarcation products for Ethernet WAN applications that enable service providers to offer Ethernet services over fiber and copper.
Under the terms of the agreement, ADVA will acquire all material Covaro Networks Inc. assets via a combination of shares and cash. A price component of USD 15 million will be paid in 2,024,190 to-be-issued shares of ADVA common stock via a capital increase. Thirty-five percent of these shares will be tradable immediately upon issuance, and the remaining new shares will be subject to various lock-up provisions. A second price component of approximately USD 4 million will be paid in cash. Furthermore, an earn-out of up to USD 5 million may be paid in cash based on achievement of specific sales and gross margin targets in Q4 2005 and FY 2006 for products developed by Covaro.
Brian L. Protiva, ADVA's chief executive officer, stated, "The acquisition of Covaro will expand ADVA's North American customer base, global product portfolio and Ethernet engineering resources. Their Etherjack® products have extremely well-developed Operations, Administration and Management (OAM) features and a broad set of available products for fiber, copper, SONET/SDH and TDM interfaces. This enhanced Ethernet access product portfolio and improved customer positioning will strengthen ADVA's ability to become the leading supplier of Ethernet access solutions � a strategically important part of our Optical+Ethernet portfolio strategy."