Consolidation on the network-equipment side of the cable industry continued last week when Arris agreed to acquire Cadant.

The combination of two companies that make telephone equipment for cable operators could speed the rollout of voice services.

Cadant will receive 5.25 million shares of Arris stock worth $47 million as of last week; Arris will assume $17 million in debt. Arris also agreed to pay up to 2 million additional shares based on future sales of cable modem termination system (CMTS) products.

Arris, which was formed when Antec bought out Nortel's share of their joint venture, extends its product line as a result of the deal. The company, which claims that it offers cable operators ?complete voice? through a full line of telephone equipment and services, has now added to its portfolio Cadant C4 and C4c cable modem termination systems.

Arris and Cadant are the only two companies with CMTS gear certified by Cable Television Laboratories as DOCSIS 1.1-compliant. The DOCSIS 1.1 standard sets specifications for services that include Internet protocol telephony, a technology many operators are examining as they consider entering the telephone market.

Mike Horton, SVP-marketing and communications at Arris, said the acquisition would accelerate the cable industry's move into telephony. While Arris was still completing the development of its own high-density CMTS to add to its line of Cornerstone products, Cadant's C4 is ready to be produced.

The merger also links Cadant's C4 with Arris's sales and support staff, which has years of experience in the telephone business.

?Two [cable customers] who had been considering buying the C4 called to say ?book it? after hearing about the merger,? Horton said. He added that Arris would retain nearly all of Cadant's staff, including its research and development and laboratory operations.

Ian Ogeirson, an analyst at Kagan World Media, the media industry newsletter and databook publisher that, like Cable World, is a subsidiary of Media Central, said the merger could make operators feel more secure since they would be dealing with a larger, better financed supplier.

?You don't want to buy a dozen of these things and have the company go out of business,? he said.

The combination seemed logical, Ogeirson said, as players in the equipment end of the business look to shore up and extend their product offerings, and follows in the footsteps of considerably large deals, including ADC's acquisition of Broadband Access and Motorola's purchase of River Delta.

Cadant, a privately held company, was founded in 1999 and is based in Naperville, Ill. Arris is based in Duluth, Ga.

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