DVTel in talks to buy Alvarion

Alvarion may sell its WiMAX unit for a few tens of millions of dollars, and DVTel will buy the rest of the company for $50 million.

Alvarion Ltd. (Nasdaq: ALVR; TASE: ALVR) is in talks to be sold to US security solutions provider DVTel Inc., while simultaneously in talks to sell its WiMAX division to Israeli private equity fund Fortissimo Capital. Five years ago, Alvarion was traded at a market cap of $900 million, and was considered a promising company in a hot market - WiMAX. But with a current market cap of just $27 million, it seems set to end its days as an independent company.

Alvarion will reportedly sell its WiMAX division for a few tens of millions of dollars, and, subject to that sale, DVTel will acquire the rest of the company for $50 million, possibly in shares.

Alvarion's share price jumped 21% in morning trading on the TASE today, to NIS 1.90, on the reports.

Alvarion was created through the merger of Breezecom and Floware in 2001 to provide wireless broadband communications equipment, based on WiMAX technology, which was considered the next generation for mobile networks. But WiMAX lost out to LTE for 4G networks, and WiMAX was relegated to a connectivity technology to broadband networks in remote regions.

In 2007, during the WiMAX hype, Alvarion was the market leader and considered a takeover target by one of the big communications equipment companies, with Cisco Systems Inc. (Nasdaq: CSCO) mentioned as a possible buyer. But falling sales, deepening losses, inventory and goodwill write-offs, and the burning of cash subsequently pushed Alvarion to the brink. It fired scores of employees in several layoff waves. A few months ago, Hezi Lapid succeeded Eran Gorev as CEO, after he ran the company for two and a half years.

At the same time, Alvarion has turned its attention to two other businesses: vertical communications solutions for enterprises and government organizations; and mobile capacity and coverage solutions and network traffic control solutions. Realizing that its original WiMAX business would not get off the ground, Alvarion turned to Wi-Fi, acquiring Wavion Networks for $30 million from Elron Electronic Industries Ltd. (TASE: ELRN) in late 2011 for this purpose. Alvarion obtained a loan from Silicon Valley Bank to finance the acquisition, but failed to comply with the financial covenants, resulting in a higher interest rate on the loan. The Wavion acquisition may ultimately have saved Alvarion, as this is the business that DVTel wants to buy.

DVTel, headquartered in New Jersey, is a private company, but an acquisition of Alvarion could give it a Wall Street listing. DVTel offers IP video monitoring and data analysis solutions. The company's target markets overlap Alvarion's markets, including municipalities, education institutions, and transport systems. If it acquires Alvarion, it will be able to expand its products line, which could offer some solace to Alvarion employees as there is apparently little redundancy and therefore less chance of massive layoffs after an acquisition.

DVTel chairman Yaron Eitan and president and CEO Yoav Stern are both Israelis.

Published by Globes [online], Israel business news - www.globes-online.com - on January 30, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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