Meriton bought by Xtera

Source: Ottawa Business Journal
April 7, 2008 - Ottawa, Canada
 

About 30 Ottawa operational and some research and development staff lost their jobs last week as another Ottawa-based technology company was acquired by a foreign firm.

Texas-based Xtera Communications officially announced Monday that it had acquired Ottawa's Meriton Networks, but news of the impending takeover had been leaking from the Kanata company for days, at least since some 30 Ottawa staffers got pink slips last Thursday.

"We laid off around about 27 per cent of the worldwide workforce," said Ken Davidson, vice-president of marketing for Meriton and now Xtera, noting the firm had about 135 workers globally.

The main job losses, he said, were in areas that had become redundant as a result of the consolidation. Also a casualty of sale is Meriton's CEO, Mike Pascoe

The Legget Drive firm is now down to 40 or 45 workers from 60, said Mr. Davidson.

Details of the sale, including the amount of money exchanged between the executives of the two privately held firms, were not disclosed, but Mr. Davidson said both companies are better off as a result.

"It's never a good thing when (layoffs) happen,'" he said. "But the market is going through a period of consolidation, and this makes Meriton stronger."

Meriton will not keep its name, he said.

Xtera, a private firm supplying optical, IP performance and service solutions to terrestrial and sub-sea global service providers, is based out of Allen, Texas (a suburb of Dallas) and has sales offices England, France, Taiwan, and China. Meriton had offices in Piscataway, N.J., Orlando, Fla., Hong Kong, Seoul, and the U.K.

Xtera said adding Meriton's metro optical networking portfolio will allow it to offer network operators a new solution partner for end-to-end next generation optical networking solutions.

"As with our previous acquisitions, Meriton brings advanced technologies, additional customers, and geographical diversity, along with improved economies of scale across our business," said Jon Hopper, CEO of Xtera. "With this acquisition, Xtera Communications has moved significantly closer toward our goal of being a leading provider of converged Ethernet/IP and optical transport solutions."

The future of Meriton and the potential for layoffs had been a topic of debate and speculation for some time on the OBJ's online discussion board.

One anonymous poster blamed the fact that Meriton was forced to sell mainly on the 40 employees who kept their jobs, calling the situation "ironic."

"Meriton gets bought by a U.S.-based company. The only people in Ottawa who keep their jobs are the R&D team who were responsible for their inability to succeed in the first place," the person wrote. "If they could have delivered a product on-time, one that was reliable and had the features the tier-one carriers needed, they wouldn't have been in

the situation they were in that demanded the sale. So the team that caused their downfall keeps their jobs and everyone else in Kanata gets laid-off."

Xtera Communications has raised in excess of US $245 million from private equity firms and venture capital firms recently. Meriton Networks is also venture-backed and had raised over $161 million. Most recently, it had been primarily funded by bridge financing.