Alcatel has agreed to acquire Ethernet equipment vendor Native Networks for $55 million in cash, the company announced today.

Alcatel struck an OEM relationship with Native in February 2003, co-developing an Ethernet packet ring card called ISA, which Alcatel sold throughout last year for use in its optical multiservice node (OMSN) multiservice provisioning platform. The ISA, which Alcatel said was "functionally compliant" with resilient packet ring technology while using MPLS to add features such as dual-ring interconnect, was sold in Europe but not the United States.

Most of Native's sales today are made through Alcatel, said David Waterhouse, vice president of product marketing for Alcatel's optical networking group.

The acquisition, which Alcatel expects to close within this quarter, also gives Alcatel Native's newest product series, the EMX 3700, a packet ring switch that will become available to European customers in June and sold in the U.S. eventually thereafter, though Alcatel won't say when.

The EMX 3700 series gives Alcatel Sonet- and SDH-compatible Ethernet packet switches with larger capacities than those already in its portfolio. The ISA board provided 6.4 Gb/s of switching capacity, and Alcatel's 1662 packet ring switch rendered about 15 Gb/s, but the EMX 3706, as one example, starts at 20 Gb/s and offers up to 60 Gb/s or 70 Gb/s, Waterhouse said. It might appeal to American interexchange carriers or cable MSOs--anyone with multi-gigabit Ethernet aggregation needs, he said.

"Two years is a good time to be able to evaluate how we're working together and the market window that's opening up in front of us," Waterhouse said. "We've now come to the logical conclusion of that evaluation, and we know there is a nice future in front of us, so it was the right time to go to the acquisition."

Alcatel would not quantify Native's annual revenue or customers. Since its founding in 1999, Native obtained about $44.6 million in three rounds of funding (mainly from European venture capital firms) and an additional $4 million debt facility.

Native's approximately 65 people will be absorbed into Alcatel's optical networking group, Waterhouse said. The start-up has a headquarters in the United Kingdom and a research and development center in Israel. "At this time there's no plan to move them," he said.