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In an unusual venture-backed transaction, startup SS8 Networks Inc. has lit up the slow-growing market for next generation network switching with a $45 million acquisition financed largely by New York private equity firm Warburg Pincus llc.
SS8, a San Jose, Calif.-based developer of Internet signaling software and services for next-generation Internet Protocol networks, said Thursday it has acquired the Enhanced Services Division of Nasdaq-traded ADC Telecommunications Inc., of Eden Prairie, Minn., as part of a $62 million Series C financing round led by Warburg.
Warburg put in $47 million for an equity stake of "more than 50%" in the combined entity, according to Warburg managing director Larry Bettino. All existing investors, Kleiner Perkins Caufield & Byers, Woodside Fund, Onset Ventures, and to a lesser extent, CDP Sofinov, participated in the financing round, contributing $15 million in a whirlwind, four-week process.
"There was so much interest but this was plenty of cash and we didn't want to take the dilution unnecessarily," said SS8 chief executive Grant Wakelin.
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