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Filed by Alteon WebSystems, Inc.
Pursuant to Rule 425 under the Securities Act of 1933 and
Deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934
Subject Company: Alteon WebSystems, Inc. - Commission File No: 000-27247
Information Presented on the Website of Alteon WebSystems, Inc.
Regarding Alteon's Expected Merger with Nortel Networks Corporation
August 1, 2000
AlteonWebSystems
Nortel Networks to Acquire Alteon WebSystems for US$7.8 Billion
Will Establish Leadership Position in Delivering High-Performance Internet Data
Centers for the New Networked Economy
Internet Data Centers "Come Together" with Optical Internet, Wireless Internet
and eBusiness to Create High-Performance, Content-Aware Networks
BOSTON, July 28 /PRNewsire/ - Nortel Networks (NYSE/TSE: NT) announced a
definitive agreement whereby Nortel Networks will acquire San Jose, Calif. -
based Alteon WebSystems, Inc. (NASDAQ: ATON - news), the leader in content aware
switching, positioning Nortel Networks as the leader in delivering high-
performance Internet data centers. Nortel Networks will pay an estimated US$7.8
billion in its common shares for Alteon WebSystems on a fully diluted treasury
stock basis.
The acquisition will enable Nortel Networks to build the next generation
Internet data center - capable of delivering content at unprecedented levels of
speed, efficiency and reliability. Nortel Networks will be in a position to
offer a complete Internet data center solution by integrating Alteon WebSystems'
content aware switching products with Nortel Networks' service offerings in
storage, gigabit switches, professional services, hosted application management/
delivery and caching.
The acquisition will also give Nortel Networks first-mover advantage in
integrating Internet data centers with the high-performance optical and 3G
wireless Internet delivering unparalleled, edge-to-edge broadband solutions.
"In the new economy, the value and richness of content across the Internet is
increasing on a massive scale," said Clarence Chandran, Chief Operating Officer,
Nortel Networks. " Our acquisition of Alteon WebSystems will accelerate the
delivery of an Internet data center capable of moving content seamlessly and
rapidly across high-performance optical Internet and 3G wireless networks."
With its massively distributed architecture, robust software capabilities,
marquee customer base, deep market penetration and dramatic revenue growth,
Alteon WebSystems is the leader in the expanding market for content switching -
forecast by International Data Corporation (IDC) to grow to more than US$4
billion by 2004 from US$203 million in 1999. Alteon WebSystems leverages this
opportunity with innovative content switching technology that enables companies
to process, track and intelligently direct Web sessions at gigabit rates while
applying sophisticated traffic control services to each session.
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`Alteon WebSystems and Nortel Networks share a common vision of high performance
content delivery services that exploit the high-performance Internet and create
new profit opportunities for service providers, said Dominic Orr, president and
Chief Executive Officer, Alteon WebSystems, Inc. `The possibilities of
integrating our intelligent content switching with Nortel Networks' optical
networking and 3G wireless Internet technologies are limitless.'
Alteon WebSystems, the market share leader in Layer 4-7 Web switching market
according to the Dell'Oro Group, posted revenue of US$51.5 million for the
quarter ending June 30, 2000 - an increase of 82 percent from the previous
quarter. Based on worldwide revenue, Dell'Oro estimates that Alteon WebSystems
holds 50 percent of the global content aware switching market in Layer 4-7
switching, and 81 percent of the gigabit Ethernet segment.
Alteon WebSystems' customer base includes first-movers in the enterprise and
leading-edge service provider markets including Yahoo!, Excite(at)Home, Buy.com,
NTT, DLJDirect, CitySearch-Ticketmaster Online, Exodus Communications,
Loudcloud, Digex, ISPs UUNet, Cable & Wireless, Virgin, Global Crossing, ICG
Communications, GTE Internet, Concentric Networks and Microsoft WebTV.
Upon completion of the transaction, Alteon WebSystems will become a wholly owned
subsidiary of Nortel Networks. Alteon WebSystems will continue to be
headquartered in San Jose, California. President and CEO Dominic Orr will become
the president of Nortel Networks' Content Distribution Networks business unit.
Under terms of the agreement, Alteon WebSystems shareholders will receive a
fixed exchange ratio of 1.83148 Nortel Networks common shares for each share of
Alteon WebSystems common stock. Based on the closing price of US$78.625 per
common share of Nortel Networks on Thursday, July 27, 2000, this represents a
price of US$144 per share of Alteon WebSystems and a price of US$7.8 billion for
the common shares of Alteon WebSystems on a fully diluted treasury stock basis.
The acquisition (excluding acquisition related costs) is expected to be neutral
in calendar year 2000 and slightly accretive in calendar year 2001 to Nortel
Networks earnings per share from operations.
The transaction, which is expected to close in the fourth quarter of 2000, is
structured to be tax-free to Alteon WebSystems' United States shareholders.
The boards of directors of both companies have approved the transaction. The
completion of the transaction is subject to customary regulatory approvals and
the approval of Alteon WebSystems shareholders.
Credit Suisse First Boston Technology Group acted as financial advisor to Nortel
Networks for this transaction and Lehman Brothers represented Alteon Web
Systems.
Alteon WebSystems pioneered the concept of Web switching and is a
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leading provider of next generation Internet infrastructure solutions designed
to enable eBusinesses to meet the demands resulting from the rapid growth of the
Internet. The company's Web data center products including Web switches, server
adapters and traffic management software are optimized to meet the specific
challenges of managing Web traffic and provide the high performance and
availability of leading networking infrastructure solutions. Founded in May of
1996, Alteon WebSystems employs a staff of approximately 500 around the world
and is publicly traded on the Nasdaq Stock Market under the symbol "ATON."
Nortel Networks is a global Internet and communications leader with capabilities
spanning Optical, Wireless, Local Internet and eBusiness. The Company had 1999
U.S. GAAP revenues of US$21.3 billion and serves carrier, service provider and
enterprise customers globally. Today, Nortel Networks is creating a high-
performance Internet that is more reliable and faster than ever before. It is
redefining the economics and quality of networking and the Internet, promising a
new era of collaboration, communications and commerce. Visit us at
www.nortelnetworks.com.
Certain information included in this press release is forward-looking and is
subject to important risks and uncertainties. The results or events predicted in
these statements may differ materially from actual results or events. Factors
which could cause results or events to differ from current expectations include,
among other things: the impact of price and product competition; the dependence
on new product development; the impact of rapid technological and market change;
the ability of Nortel Networks to make acquisitions and/or integrate the
operations and technologies of acquired businesses in an effective manner;
general industry and market conditions and growth rates; international growth
and global economic conditions, particularly in emerging markets and including
interest rate and currency exchange rate fluctuations; the impact of
consolidations in the telecommunications industry, the uncertainties of the
Internet; stock market volatility; the ability of Nortel Networks to recruit and
retain qualified employees; and the impact of increased provision of customer
financing by Nortel Networks. For additional information with respect to certain
of and other these factors, see the reports filed by Nortel Networks with the
United States Securities and Exchange Commission. Nortel Networks disclaims any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
Investors and security holders are advised to read the proxy
statement/prospectus regarding the transaction to be filed with the Securities
and Exchange Commission by Nortel Networks and Alteon WebSystems, as it will
contain important information. Security holders may obtain a free copy of the
proxy statement/prospectus (when available) and other related documents filed by
Nortel Networks and Alteon WebSystems at the Commission's website at
www.sec.gov. When available, the proxy statement/prospectus and the other
documents may also be obtained from Nortel Networks Corporation, Attention:
Investor Relations 8200 Dixie Road, Suite 100 Brampton, Ontario L6T 5P6 Canada
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Alteon WebSystems, its directors, executive officers and certain other members
of Alteon WebSystems' management and employees may be soliciting proxies from
Alteon WebSystems' stockholders in favor of the merger. Information concerning
the participants will be set forth in the proxy statement/prospectus when it is
filed with the Securities and Exchange Commission.
SOURCE: Nortel Networks Corporation
Caution Concerning Forward-Looking Statements
This filing contains certain statements that are based on Alteon's present
expectations of future events. These statements are "forward-looking statements"
within the meaning of the safe-harbor provisions of the U.S. federal securities
laws. These forward-looking statements are subject to risks and uncertainties
that could cause actual results or outcomes to differ materially from those
contemplated by present expectations. Factors that could cause or contribute to
such differences include, but are not limited to, risks relating to: the
consummation of the contemplated merger involving Alteon and Nortel Networks,
such as the risk that the companies may not obtain the required regulatory
clearances or stockholder approval in a timely manner or at all; the timing and
successful completion of technology and product development efforts; integration
of the technologies and businesses of Alteon and Nortel Networks; and changing
relationships with customers, suppliers and strategic partners.
These and other risks associated with the businesses of Alteon and Nortel
Networks that may affect their operating results are described in the most
recent Form 10-Q, most recent Form 10-K and other periodic reports filed by
Alteon and Nortel Networks with the Securities and Exchange Commission.
Additional Information About the Merger
Alteon expects to mail to its stockholders a proxy statement/prospectus
containing information about Alteon, Nortel Networks and the Merger. In
connection with the Merger, Nortel Networks plans to file a registration
statement on SEC Form S-4. Investors and security holders are urged to read the
registration statement and the proxy statement/prospectus carefully when they
become available.
Alteon will be, and certain other persons may be, soliciting proxies from
Alteon's stockholders in favor of the adoption of the merger agreement. The
directors and executive officers of Alteon and the directors and executive
officers of Nortel Networks may be deemed to be participants in Alteon's
solicitation of proxies. Information regarding the participants in the
solicitation and a description of certain interests the directors and executive
officers of Alteon have in the Merger is contained in the document filed with
the SEC by Alteon pursuant to Rule 425 on July 28, 2000.
How to Obtain Documents from the Securities and Exchange Commission
In addition to the registration statement and the proxy statement/prospectus,
Alteon and Nortel Networks file annual, quarterly and other periodic reports,
proxy statements and other information with the SEC. You may obtain free copies
of these documents, as they are filed, through the website maintained by the SEC
at http://www.sec.gov.
You may read and copy any reports, statements or other information filed by
Alteon or Nortel Networks with the SEC at the SEC public reference rooms at 450
Fifth Street, N.W., Washington, D.C. 20549 or at any of the SEC's other public
reference rooms in New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms.
Alteon's and Nortel Networks' filings with the SEC are also available through
commercial document-retrieval services.
How to Obtain Documents from Alteon
Free copies of the proxy statement/prospectus and other documents, when they
become available may also be obtained from Alteon by directing a request
through the Investors Relations portion of Alteon's website at
http://www.alteonwebsystems.com or by mail to Alteon WebSystems, Inc., 50 Great
Oaks Blvd., San Jose, CA 94119, attention: Investor Relations, telephone: (408)
360-5500.
