* Deal to give DragonWave 360 more staff
* DragonWave to pay 15 mln euros in cash, shares
* Sales based earn-out payment maximum 80 mln euros
* Deal to grow DragonWave sales 4-5 fold
* DragonWave shares open about 6 pct higher
By Tarmo Virki, European Technology Correspondent
Nov 4 Canadian telecom network equipment maker
DragonWave Inc will buy microwave technology
business of Nokia Siemens Networks in a deal
potentially worth up to 110 million euros.
The deal will boost sales and products and more than double
staff at DragonWave, which specialises in microwave technology
that moves data between cellular towers and telecom networks.
DragonWave will become the key microwave technology supplier
for Nokia Siemens, allowing the venture to focus better on
mobile broadband and managed services.
"It makes a lot of sense for both companies," said a
spokesman for Nokia Siemens, the world's second largest mobile
network gear provider.
The move comes as Nokia Siemens, a venture of Nokia
and Siemens , faces strong pressure from
Ericsson and Chinese rivals in its main business.
DragonWave will pay 10 million euros in cash and 5 million
in its stock, while taking over employee liabilities of about 10
million and signing a capital asset lease for 5 million.
It expects to finance the transaction through a combination
of cash and increased debt facilities.
The deal includes a sales-based 18-month earn-out period,
which would trigger further cash payments of 80 million euros if
DragonWave reaches its quarterly revenue target of $100 million.
The Nokia Siemens business will boost DragonWave's sales 4-5
fold, executives of the Canadian firm told an analyst call.
DragonWave's June-August sales dropped to $13.6 million and
the firm posted a fourth straight quarterly loss as a cutback in
spending at U.S.-based customer Clearwire left a hole
in its business.
DragonWave sees its gross margins at around 30 percent and
operating profit margin at around 10 percent when it reaches
$100 million in quarterly revenues.
About 360 Nokia Siemens Networks employees to will be
transferred to DragonWave under the deal, more than doubling the
Canadian firms' 270 staff.
DragonWave shares rose about 6 percent at open on the
Toronto Stock Exchange, but are still down around 50 percent so
far this year.