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Intersil, Elantec Deal Get FTC Clearance

The $1.4 billion merger between WLAN chipset maker Intersil Corp. and Elantec Semiconductor received early anti-trust clearance from the Federal Trade Commission (FTC).

The federal regulatory body has granted an early end to the applicable antitrust waiting period, saying it saw no anti-competitive problems with the planned acquisition, which was announced earlier this month.

The cash and stock deal, which is part of a move by Intersil to expand into high-growth analog markets, would create one of the biggest chip companies in the U.S but, by granting early clearance, the FTC said it found no antitrust issues.

Intersil, which competes head-to-head with Analog Devices and Texas Instruments, makes high-speed wireless LAN chipsets and other integrated circuits (ICs). The company's major clients include Cisco, Compaq, IBM, Nokia, and Sony.

The Elantec purchase, which is seen as the jewel in Intersil's wireless crown, would create a company with a solid balance sheet of more than $550 million in cash, according to Intersil CFO Dan Heneghan. The combined firm would be free of debt.

Under terms of the transaction, the Irvine, CA-based Intersil would pay Elantec shareholders 1.24 shares of Intersil stock and $8.00 in cash for each Elantec share. Based on Intersil's closing price of $36.65 per share on March 8, 2002, the exchange ratio is 1.458 shares of Intersil stock for each Elantec share.

Intersil said the deal, which was driven by the increase demand for wireless products, was valued at approximately $1.4 billion and represents a 15 percent premium to the 30-day average exchange ratio of Elantec and Intersil stocks.

Intersil CEO Greg Williams assume the post of executive chairman of the board of the combined entity. Williams' responsibilities would include hammering out the company's corporate, wireless and analog strategy while Elantec's chief executive Rich Beyer would serve as president and CEO of Intersil.

The transaction is the third acquisition for Intersil, which previously acquired two wireless companies.

Elantec, a provider of high performance analog ICs, is a player in the optical storage (CD read/write & DVD recordable) and flat panel display markets.

Intersil said the purchase adds Elantec's expertise in analog optical storage and flat panel Displays. "In addition, Elantec's product offerings in communication ICs and standard analog will strengthen Intersil's portfolio of analog ICs."