Privately held storage software maker FalconStor Inc. this week said it agreed to combine with Network Peripherals Inc. in a reverse merger that would make FalconStor a publicly traded company.
The all-stock deal would be valued at about $300 million, based on Network Peripherals' reported current market capitalization of about $107 million, sources familiar with the transaction said.
Following the completion of the merger, which is expected to close in the third quarter, the new company would be known as FalconStor Software Inc. and would be listed on the Nasdaq National Market under the stock symbol FNST.
ReiJane Huai, who started FalconStor in February 2000, will become president and chief executive of the new company, which will not absorb Network Peripherals' business. None of Network Peripherals' senior executives were slated to join the new company.
Under the terms of the agreement, subject to shareholders' approval and customary and regulatory conditions, Network Peripherals will issue shares of its common stock for FalconStor shares. Upon completion of the transaction, FalconStor shareholders will own about two-thirds of the new company, with Network Peripherals holders owning one-third. Network Peripherals, which currently has about 13.4 million shares, will issue to FalconStor holders twice that amount of new shares. Meanwhile, Network Peripherals said Lehman Brothers was exploring strategic alternatives for its existing hardware business.