Tellabs Inc. has announced the acquisition of Ciena Corp. of Linthicum, Md., a manufacturer of dense wavelength division multiplexing (WDM) technology. Tellabs, of Lisle, Ill., manufactures digital cross-connect switches that help companies manage traffic on high-speed data networks. Ciena's dense WDM equipment boosts the capacity of fiber optic networks. The transaction involved a one-to-one stock transaction valued at about $7.1 billion based on the closing price of Tellabs' common stock June 2, the day before the companies announced the merger. As part of the deal, Ciena's Patrick Nettles will retain his title as president and become chief operating officer. Tellabs' Michael C. Birck will remain CEO of the combined companies. In a related development, Ciena settled its dispute with Pirelli Cables and Systems in Milan, Italy. Pirelli had charged Ciena with violating several of its patents. The settlement calls for Ciena to pay Pirelli $30 million and royalties for future sales. The companies also signed a nonexclusive cross-patent agreement.