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Broadcom Acquires BlueSteel Networks

In a move to increase the security of broadband connections, Broadcom Corp. Tuesday bought securities supplier BlueSteel Networks Inc. for about $117.4 million.

Broadcom (BRCM) will issue an aggregate of approximately 375,000 shares, at approximately $313 per share, of its common stock in exchange for all outstanding shares of BlueSteel preferred and common stock. Shares of Broadcom were up 6 percent in mid-day trading.

BlueSteel's products address a growing demand by communications companies for technology that will help them offer strong broadband security across their product line. As the Internet matures into the medium of choice for commercial transactions, traditional infrastructure equipment including routers, gateways, firewalls, modems, LAN adapters and other Internet appliances, requires staunch security as a standard product feature.

Broadcom plans to retain the services of members of BlueSteel's technical advisory board (TAB) which consists of renowned industry experts in the security and cryptography industry who have created many of the algorithms and standards that BlueSteel is implementing in its processors.

The board includes Tom Berson, a noted Silicon Valley entrepreneur and principal scientist at Xerox PARC; Professor Emeritus Martin Hellman of Stanford University, the co-inventor of public-key cryptography; Dr. Stephen Kent of GTE/BBN, the author of several Internet Engineering Task Force (IETF) standards for Internet Protocol Security and a renowned expert on computer and Internet security; and Paul Kocher, a noted security consultant, co-architect of secure socket layer (SSL) version 3.0 for Netscape, designer of the data encryption standard (DES) search machine "Deep Crack," and developer of many well known security attacks.

"This is a powerful combination that brings Broadcom's broadband communications expertise together with BlueSteel's leadership in high-speed network security processors," said Dr. Henry T. Nicholas III, president and chief executive officer of Broadcom.

"This important acquisition provides Broadcom with a scalable family of security processors and cores with performance up to one 1 Gigabit per second and beyond, to address a variety of VPN products and Broadcom system-on-a-chip devices."

BlueSteel is a fabless semiconductor company developing and marketing high-performance Internet security processors for e-commerce and virtual private networks.



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