Ascend Communications Inc., which sells computer switches that meld data and voice communications, agreed Monday to buy Stratus Computer Inc. for $948 million in stock to boost its offerings to phone companies.
Ascend will pay 0.75 share for each of Stratus’ 27 million shares, valuing Stratus shares at $35.11 based on Ascend’s closing price Monday. Ascend rose $2.34, to $46.81 in in trading of 20.4 million shares, making it the most active U.S. stock on the Nasdaq stock exchange. Stratus jumped $4.87, to $33.75.
Stratus makes equipment and software that help the Baby Bells run their networks. Alameda-based Ascend now can sell those products to the Bells and other Internet service providers looking for ways to squeeze more capacity from phone lines.
Smaller networking companies such as No. 5 Ascend need to bulk up their offerings to compete with Lucent Technologies Inc. and Northern Telecom Ltd. in the fast-growing market. “You have to have this technology to be a player,” said William Rabin, an analyst at J.P. Morgan Securities Inc., who has a “buy” rating on Ascend.
Ascend’s management said it will sell parts of Marlboro, Mass.-based Stratus by the end of the year.
