Company Announces Intent to Acquire IPSec Industry Leader TimeStep Corporation and IP Edge
Routing Technology Innovator Northchurch Communications
MAIDENHEAD, U.K., August 26, 1999, - Newbridge Networks (NYSE: NN, TSE: NNC) today announced
strategic Internet protocol (IP) portfolio enhancements which offer service providers the ability
to generate revenue by delivering differentiated IP services. The Company has completed
negotiations for two acquisitions that will combine industry-leading IPSec from TimeStep
Corporation, of Kanata, Ontario and innovative IP edge routers from Northchurch Communications
Inc., of Andover, Massachusetts. The move expands the addressable market and greatly enhances the
Company's ability to deliver innovative IP services solutions.
According to Infonetics Research, Inc., a leading market research firm, the IP-VPN services
market will reach U.S. $11 billion by 2001. The service provider edge market is expected to grow
from U.S. $1 billion today to U.S. $3 billion by 2002.
"Today's announcement introduces a solution for service providers to move beyond simple IP
transport to making money by offering differentiated IP services," said Alan Lutz, president and
chief operating officer, Newbridge Networks. "It builds on our enhanced IP service solution,
which enables service providers to meet their requirement to offer billable IP services that
possess the quality of service attributes essential for handling voice and video services."
"We are focused on hot growth markets with an eye to enabling carriers to deliver
revenue-generating services," said Jim Arseneault, executive vice president, IP & Internetworking
Products Group, Newbridge Networks. "By entering the right markets at the right time, and
blending the best of IP and ATM, we can immediately address the exploding markets for IP-VPNs and
intelligent edge routers and enable e-services."
With the commoditisation of Internet connection services, carriers are eager for innovative
technology to help them launch new, revenue-generating business and residential IP services.
TimeStep's IPSec technology, embedded into the Newbridge enhanced IP platforms, provides a
critical element in building secure IP-VPN solutions. The Northchurch edge service router, a next
generation programmable platform, integrated into Newbridge’s rich service management suite of
products, enables the creation of personalised IP services, further enhancing the intelligence of
the edge router.
"TimeStep views this acquisition as a big win for both companies, but more importantly it is a
win for our customers," said Tim Hember, president and chief executive officer, TimeStep
Corporation. "Within Newbridge, we will extend our industry-leading secure IP-VPN solutions into
global, geographically distributed secure services, while continuing to develop the best IP-VPN
technology into the next millennium."
A pioneer in the secure IP-VPN industry, TimeStep has focused on developing scalable and
manageable secure IP-VPN solutions for network service providers and large enterprises.
TimeStep's flagship product line recently won Network Magazine's "1999 Product of the Year" and
InfoWorld's "Golden Guardian Award". TimeStep has taken a strong leadership role in the
development of the IPSec standard. Its suite of hardware gateways, software clients, and central
management is the most comprehensive solution for corporate intranets, extranets, and Internet
"Newbridge Networks' global presence and managed network solution model will strengthen
TimeStep’s award-winning VPN offerings to partners such as GTE Internetworking," said Robert
McKinney, director of VPN and Internet Security Services, GTE Internetworking. "The acquisition
of Timestep by Newbridge Networks affirms GTE Internetworking’s selection of Timestep’s secure
and scalable VPN technology as a key component of our market-leading, managed VPN Advantage
The Northchurch platform provides industry-leading circuit aggregation capacity, offering over
4000 T1s in a seven-foot rack. It is the only edge solution capable of wire-speed traffic
management and processing at OC-48 line rates. Integration of this platform into the powerful
Newbridge management suite will afford service providers a highly flexible solution supporting
industry-leading QoS, traffic shaping, VPNs and accounting combined with simplified policy
management, traffic monitoring, profiling and planning functionality.
"Combining Northchurch’s strength in IP routing with the strong presence of Newbridge in carrier
service management will, for the first time, offer service providers the ability to deliver true
carrier-grade IP services to its customers," said David Sawyer, president and chief executive
officer, Northchurch Communications.
"Service providers like SAVVIS/Bridge have been looking for a system-level approach to IP
services, offering high-capacity access, flexible interfaces, and carrier-grade routing support.
At the same time, we want a solution that provides us with the ability to deploy value-added
services, such as IP-VPNs, traffic shaping, and intelligent subscriber management," said
Dr. Rick Bubenik, executive vice president and chief technology officer, SAVVIS/Bridge.
"Strengthened by the Newbridge management offering, the Northchurch intelligent edge device gives
Newbridge a unique market opportunity, allowing it to introduce IP-based services with the
service quality associated with its ATM-based product offering."
"Early on, Northchurch recognised the need to deliver both a next generation router device and an
IP-based service delivery platform, thus maximising the overall size of the market opportunity,"
said Michael Howard, principal analyst, Infonetics Research, Inc. "Northchurch’s technology will
result in new market opportunities and an increased customer reach for Newbridge."
The total cost of the acquisitions to Newbridge is expected to be approximately C$350 million,
payable in cash over the next two years. The acquisition costs include projected performance
payments. The Newbridge ownership position prior to the acquisitions was approximately 30
percent in each of TimeStep and Northchurch.
A take-over bid circular in connection with the TimeStep acquisition will be mailed to TimeStep
shareholders shortly. The acquisition has been approved by the board of directors of Newbridge
and is subject to various closing conditions. The board of directors of TimeStep has agreed to
support the acquisition. The acquisition of Northchurch is expected to close over the next week.
Newbridge Networks designs, manufactures, markets and services wide area networking solutions for
Internet service providers; local, long-distance, and wireless communications companies; cable
television carriers; and corporate customers in more than 100 countries. The Company leverages
its relationship with a growing family of Newbridge Affiliate companies and strategic alliances
with numerous other networking companies to deliver complete, end-to-end solutions. Newbridge
customers include the world’s 350 largest telecommunications service providers and more than
10,000 corporations, government organisations and other institutions. Founded in 1986, the
Company employs more than 6,000 people on six continents. News and information are available at
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Newbridge and logo are registered trademarks of Newbridge Networks Corporation.
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