Zhone Tech Enters Agreement to Acquire Dasan Network Solutions

Zhone Technologies, Inc. announced that it has entered into a definitive agreement to merge with Dasan Network Solutions, Inc., a leading global network solution provider that establishes end-to-end capabilities across carrier and enterprise markets and wholly owned subsidiary of DASAN Networks, Inc.

Zhone will acquire Dasan Network Solutions from DASAN Networks and, in exchange, will issue common stock to DASAN Networks representing 58% of the combined company. The existing stockholders of Zhone will retain 42% of the combined company. The combined company will be called DASAN Zhone Solutions, Inc. and will have two co-CEOs, one appointed by DASAN Networks and the other by Zhone. The board of directors of the combined company will consist of four directors appointed by DASAN Networks and three directors appointed by Zhone. Other management positions in the combined company will be filled from both companies.

“The merger of Zhone and Dasan Network Solutions will immediately position our company as a leading provider of Broadband Access, Mobile Backhaul, Ethernet Switching and Passive Optical LAN solutions,” stated Jim Norrod, CEO of Zhone Technologies. “We will expand our customer base around the world and take advantage of greater economies of scale in manufacturing, support and engineering.”

Together, the combined company will deliver a broad array of products that will allow carriers and enterprises to enable the connected world at light speed. Zhone expects to commence trading of the common stock of DASAN Zhone Solutions under the ticker symbol DZSI on the Nasdaq Capital Market after the closing of the merger. Until that time, the common stock of Zhone will continue to trade under the ticker symbol ZHNE on the Nasdaq Capital Market. The consummation of the merger, which is currently expected to occur by the end of the third quarter of 2016, is subject to customary closing conditions, including, among others, receipt of regulatory approvals, authorization for listing of the combined company’s common stock on the Nasdaq Capital Market, and the approval of Zhone’s stockholders. Zhone will convene a stockholders’ meeting for purposes of voting on the transaction on a date to be announced.

Latham & Watkins LLP is acting as Zhone’s legal advisor in connection with the transaction. Cowen and Company, LLC is acting as financial advisor to Zhone.