Marconi PLC is buying Northwood Technologies Inc. for $42-million in cash, and plans to turn the Ottawa startup into the centrepiece of a new headquarters for one of the British giant's wireless technology product groups.
Marconi said Northwood will become the core of its new wireless network planning unit, one of six product groups within the company's wireless division. The private Canadian company makes software used to design wireless telecommunications networks.
The new unit will have about 180 employees, although about half of them will be based in London, Dallas and other locations outside the Ottawa operation. Northwood, which started 10 years ago as a consulting firm, has 85 employees.
Northwood officials said the deal will allow their products to reach new markets through Marconi's global distribution and sales networks. "It was an opportunity that was too good to turn down," said Johannes Hill, Northwood's chief executive officer. "It's an opportunity for the company to grow."
Mr. Hill will work at Marconi for about six months as an adviser and then step down. All other Northwood employees are scheduled to stay on, and some will reap other benefits from the deal: About 85 per cent of Northwood employees are also shareholders.
Larry Woods, Northwood's chief operating officer, said the company hooked up with Marconi after starting a search last fall for about $15-million in venture capital. The startup had not sold any equity to institutional investors.
For Marconi, the deal is its second major investment in the Ottawa area in less than a year. Marconi Communications, one of Marconi's divisions, announced last June that it would spend about $250-million (U.S.) to develop a high-tech centre that would focus largely on routing and switching gear for networks.
That facility, one of the assets picked up in April, 1999, in a $4.5-billion acquisition of Fore Systems Inc. of Warrendale, Pa., is scheduled to have about 400 workers within four years.
Marconi shares fell 32 cents or 2.7 per cent to $11.38 yesterday on the Nasdaq Stock Market. The stock, which has been suffering in recent months with many others in the telecom sector, has a 52-week range of $37.50 and $8.62.