Nortel Agrees to Buy Tasman Networks for $99.5 Mln (Update4)

Dec. 27 (Bloomberg) -- Nortel Networks Corp., the largest North American maker of telephone equipment, agreed to buy Tasman Networks Inc. for $99.5 million to add Internet-based products for branch offices of large corporations.

Closely held Tasman, based in San Jose, California, makes network routers that combine voice, network firewall, Internet and other services on one system. The purchase probably will close in the first quarter, Brampton, Ontario-based Nortel said today in a statement.

Tasman's products, which will be offered through Nortel's enterprise and Internet network groups, are for branch offices of large companies. On Nov. 2, Nortel boosted its sales-growth forecast this year to 13 percent after a 41 percent jump in Web- based equipment orders in the third quarter and a 22 percent increase in revenue.

``We didn't have products for small, branch offices,'' Pat Cooper, a Nortel spokesman, said in an interview today. ``This rounds out our portfolio.''

Nortel shares fell 9 cents to $3.07 at 4 p.m. in New York Stock Exchange composite trading. They've declined 12 percent this year.

Tasman was started as Trellis in 1997, becoming known as Tasman in 2002. The company employs about 160 people in California and India. It's too soon to tell whether the acquisition will result in job cuts, Cooper said. ``Right now the plan is to absorb them,'' he said.

Cooper declined to provide details on Tasman's sales and profits. Nortel hasn't provided information on the effect the acquisition might have on results.

Nortel's third-quarter loss narrowed to $105 million, or 2 cents a share, from $259 million, or 6 cents, a year earlier, the company said on Nov. 2.

To contact the reporter on this story: John Stebbins in Chicago Stebbins@bloomberg.net

To contact the editor responsible for this story: Emma Moody at emoody@bloomberg.net.