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Arvind Chhatbar, CEO of Enablence. (Darren Brown, OBJ)

Enablence Technologies Inc. (TSX-V:ENA) has bought yet another company, adding New Hampshire-based broadband access technology maker Pannaway Technologies Inc. to its slew of subsidiaries.

The Ottawa-based optical technology maker said it has signed a definitive agreement to buy Pannaway and merge it with its FTTx Networks division, joining Pannaway with another recently acquired subsdiary, Wave7 Optics, which Enablence acquired in May.

"With this merger, Enablence's FTTx division will have one of the broadest set of access solutions in the industry, an expanded customer base of 420 customers and a capability to provide our customers with an evolutionary path from Ethernet/IP (Internet protocol) to FTTx using state-of-the-art technologies," said Enablence CEO Arvind Chhatbar in a statement.

The company has agreed to issue 25.75 million of its common shares in exchange for all outstanding Pannaway shares, which includes 5.5 million common shares to be issued on the conversion of certain outstanding Pannaway debt. After the deal closes, the share amount will represent approximately 12 per cent of Enablence's total issued shares, which were worth about 38 cents each at 3:09 p.m. on the TSX Venture Exchange, pricing Pannaway at approximately $9.79 million in shares.

As part of the deal, Enablence will also issue a US$3-million unsecured 10-year note bearing five per cent interest, which is convertible for five years.

The acquisition will help Enablence bridge the gap between providers of more traditional Internet access technology such as DSL (digital subscriber access) and its own fibre-to-the-premise product portfolio, which allows service providers to offer triple-play voice, video and data services through systems such as Wave7's Trident7 universal access platform.

"We anticipate that the merger will permit the entire FTTx division to achieve positive cash flow in fiscal year 2010, contributing to our drive towards profitability by expanding our market reach to include existing DSL-based service providers seeking to evolve their networks to optical access," said Mr. Chhatbar, who noted that the two companies have been working on the deal for the past half-year.

However, the companies hinted there might be layoffs involved in the transaction: "The operations of the two companies will be streamlined to help achieve cost savings and move toward profitability."

Enablence has been trying in the past two years to corner the fibre-to-the-premise market with an aggressive strategy of acquisitions across the space's various verticals. It began in March 2007 with the $6.2-million purchase of Swiss photodiode manufacturer Albis Optoelectronics, then bought optical wafer maker ANDevices for US$13.5 million in February of this year. The $14-million acquisition of Wave7 followed in May, and in July Enablence paid $9.5 million to buy a portfolio of photonics technologies from DuPont.

Shares of Enablence soared to a high of 44 cents Tuesday morning before settling down to 38 cents in the late afternoon, up six cents from the opening bell.