Northern Telecom to Buy Shasta Networks

Northern Telecom Ltd., North America’s No. 2 phone equipment maker, agreed to buy Shasta Networks Inc. for $340 million in cash and stock to expand its line of Internet products for businesses. Nortel, based in Brampton, Canada, would pay $318 million in stock and $22 million in cash for closely held Shasta. The final amount would depend on whether Shasta meets certain financial targets. The acquisition is expected to close in 30 days. Sunnyvale, Calif.-based Shasta, a start-up venture, makes equipment and software that let phone companies run Internet-based networks for small and medium-sized businesses at low cost. Nortel said the acquisition will not affect its earnings from operations in 1999. Nortel shares fell $1.38 to close at $72.38 on the New York Stock Exchange.