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CNT Walks Off With Inrange

CNT (Nasdaq: CMNT) has acquired Inrange Technologies Corp. (Nasdaq: INRG) for $190 million in cash, merging two high-end storage networking players in a deal that analysts say is probably the best possible outcome for Inrange (see CNT to Acquire Inrange for $190M).

Also today, Inrange warned that its first-quarter 2003 revenues would be in the range of $39 million to $41 million, considerably lower than the previous $51.1 million estimate by analysts polled by First Call. Inrange's parent company, SPX Corp. (NYSE:SPW), has reportedly been looking to offload the struggling subsidiary for some time.

"Inrange needed to get acquired," says John Roy, analyst at Merrill Lynch & Co. Inc. "They were losing out to Brocade Communications Systems Inc. [Nasdaq: BRCD] and McData Corp. [Nasdaq: MCDTA] -- and then, here comes Cisco Systems Inc. [Nasdaq: CSCO]."

He adds that the deal will allow CNT and Inrange, which both sell SAN extension products, "to get together and stabilize their position."

On news of the acquisition, CNT's stock plunged nearly 28 percent, to $5.10 per share, while Inrange closed up 2.8 percent to $2.28 per share. The price tag of $190 million, or $2.31 per share of Inrange, is only a 4 percent premium over Inrange's Friday closing price of $2.22. The deal would leave the combined companies with around $50 million cash on hand.

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