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Meru Networks (MERU) Prices 3M Share Offering At Discount

 February 27, 2013 10:10 AM

(By Balaseshan) Meru Networks Inc. (NASDAQ: MERU), which provides wireless local area network (LAN) services, said it has priced an underwritten public offering of 3 million common shares at $4.00 per share, a 2.4% discount to previous close.

Gross proceeds, before deducting the underwriting discounts and commissions and offering expenses payable by Meru, are expected to be about $12 million. The offering is expected to close on or about March 4.

Meru has granted the underwriter a 30-day option to purchase up to 450,000 additional shares of common stock to cover overallotments, if any. Directors and executive officers of Meru Networks will purchase shares from the underwriters at the public offering price.

As of February 14, 2013, 15.78 million shares of outstanding common stock were held by non-affiliates, the aggregate market value of which was $70.39 million calculated based on the closing price per common share of $4.46 on February 22.

Meru currently intends to use the net proceeds from the sale of common shares for general corporate purposes, which may include working capital, sales and marketing activities and general and administrative matters.

The company said it will retain broad discretion over the use of the net proceeds from this offering. Pending the application of the net proceeds, Meru plans to invest the net proceeds in short-term, investment-grade securities.

The company expects to incur operating losses and continued cash usage in 2013 as a result of expenses associated with the continued development and expansion of its business. As of December 31, 2012, Meru had cash and cash equivalents balances of $22.9 million.

MERU is trading up 9.76% at $4.50 on Wednesday. The stock has been trading between $1.42 and $5.43 for the past 52 weeks.

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