After two weeks of uncertainty about whether the agreement wireless broadband companyAlvarion (Nasdaq:ALVR; TASE:ALVR) signed to acquire silicon Valley-based InterWAVE Communications International (Nasadq: IWAV) would go ahead, it seems that the chances are growing that it will.
Yesterday, Alvarion announced that the two companies had amended the amalgamation agreement, and that InterWAVE shareholders would be asked to approve revised terms. The amended agreement calls for Alvarion to provide additional interim financing and to acquire InterWAVE for $4.18 per share in cash, for total consideration of approximately $40.5 million. This is considerably lower than the price of $5.75 per share that the two companies agreed upon in July, which would have given a total consideration of $56 million.
Two weeks ago, Alvarion announced that the July agreement would not go ahead, saying that, that after reviewing InterWave's recent financial results as well as anticipated results going forward, it had determined that interWAVE "had experienced a material adverse effect with respect to its business".
InterWAVE will be sending revised proxy material to shareholders for an interWAVE. The amended agreement also calls for the dismissal of the lawsuit recently filed by InterWAVE against Alvarion.
"There are numerous strategic advantages to this combination for both companies," said InterWAVE CEO Erwin Leichtle, "We hope to distribute revised proxy material and hold a shareholder meeting as soon as possible to approve the revised terms." The shareholder meeting is expected to be held in six to eight weeks
Alvarion CEO Zvi Slonimsky said, "We continue to believe the market opportunity is very attractive with excellent growth potential. Alvarion anticipated reduced cash generation by InterWAVE, increased cash outlay by Alvarion and therefore reduced the consideration paid in the transaction. We will move aggressively to integrate the operations, applying our experience and strong management capabilities immediately after closing. We believe that the deal will turn accretive sometime during the third quarter of 2005."
Alvarion provides broadband systems to carriers, ISPs and private network operators, and is a pioneer of WiMAX technology. InterWAVE provides portable mobile cellular networks and broadband wireless solutions.
Shares of Alvarion closed at $15 on Nasdaq on Friday, giving the company a market cap of $773 million. Shares of InterWAVE closed at $2.46, giving the company a market cap of $22 million. On the Tel Aviv Stock Exchange this morning, Alvarion shares are up 1.45%, at NIS 65.92.
Published by Globes [online] - www.globes.co.il - on October 17, 2004