Networking firm Cabletron Systems of Rochester, NH, has plans in the works to divide its business into four independent operating companies that address what it calls "key high growth areas" of the co...
March 1, 2000
Networking firm Cabletron Systems of Rochester, NH, has plans in the works to divide its business into four independent operating companies that address what it calls “key high growth areas” of the communications marketplace.
The new divisions will be: Riverstone Networks, which will focus on the service provider and broadband equipment market; Enterasys Networks, which will deal exclusively with Global 2000 customers; Global Network Technology Services (GNTS), a network consulting company that will focus on professional services; and Aprisma Management Technologies, which will deliver infrastructure management software for service provider and enterprise markets.
These four companies will initially be subsidiaries of Cabletron; the eventual goal is to have four separate, publicly traded companies. Cabletron anticipates that this will be achieved by spinning out the new companies to its shareholders, preceded where appropriate by subsidiary IPOs.
Cabletron has also announced that private equity investment firm Silver Lake Partners, Menlo Park, CA, will take as much as a $200 million stake in the newly-launched subsidiary companies.
Silver Lake has agreed to purchase preferred stock in Cabletron with a conversion price of US$40 per share, as well as warrants for common stock with an exercise price of US$45 per share. Silver Lake will also invest in each of the four companies, with the stake representing up to three per cent of each company’s diluted equity.