Lucent Technologies is to acquire Riverstone Networks for $170m (£100m) to help expand its broadband and optical networking infrastructure offering.
Riverstone makes powerful Ethernet routers that can be used by service providers to deliver new voice and data services to end users.
Loss-making Riverstone is to file for Chapter 11 bankruptcy as part of the deal. The company has been under investigation by the US Securities and Exchange Commission since April 2003 over its accounts.
Lucent has been reselling Riverstone equipment since 2004. Riverstone's 400 employees are expected to join Lucent as part of the acquisition.