Broadcom Corp. Monday snatched up
optical communications chip maker
NewPort Communications Inc.
The all-stock transaction is estimated to be worth $1.24 billion and
requires that Broadcom issue more than 5.5 million
shares of common stock to seal the deal.
The acquisition adds OC-48 and OC-192 Synchronous Optical Network
transceivers, framers, and serial 10-Gigabit per second Ethernet technology
to Broadcom’s integrated circuit line-up.
The deal is yet another acquisition for the aggressive chipmaker that
competes with rivals like Lucent
Technologies Inc., JDS Uniphase Corp.
and SDL Inc.
Dr. Henry T. Nicholas III, Broadcom president and chief executive officer,
said the acquisition is a key step in advancing its goal to provide
Internet communications solutions designed to leverage broadband
communication networks worldwide.
“The announcement reinforces Broadcom’s strategic initiative to provide
end-to-end solutions across Metropolitan and Wide Area Networks,” Nicholas
said.
Dr. Armond Hairapetian, NewPort Communications president and chief
executive officer, said the companies combined capabilities and resources
would bring one of the most complete system solutions to the optical
communications marketplace.
“Broadcom’s market presence and proven ability to deliver innovative,
cost-effective silicon solutions and NewPort’s complementary intellectual
property and talented engineering pool together promise to speed up the
timetable for delivering complete solutions for MAN and WAN networks,”
Hairapetian said.
Earlier this month Broadcom acquired Silicon Spice Inc., a leading
developer of gateway and carrier access chipsets. Broadcom sought Silicon
Spice’s unique signal processing architecture, which is capable of fueling
its Voice over Internet Protocol ambitions.
Nicholas said NewPort Communication’s SONET/Synchronous Digital Hierarchy
expertise is synergistic with its 10-Gigabit Ethernet technology as well as
complementary to the communications processor technology acquired by its
Silicon Spice acquisition.
“Together these acquisitions will provide Broadcom with a powerful platform
to address the rapidly growing wide area-networking marketplace,” Nicholas
said.
The merger provides Broadcom with and expansive offering of CMOS optical
communications technologies for the next generation SONET/SDH and
10-Gigabit Ethernet networks. Specifically, Broadcom will be able to offer
optical communications and laser module suppliers with a broad portfolio of
optical MAN and WAN infrastructure products.
NewPort a achieved major industry milestones when it introduced the world’s
first single-chip 2.5 Gigabit-per-second OC-48 transceiver in July 1999 and
the world’s first 10 Gigabit-per-second CMOS OC-192 transceiver solution in
May this year.
The devices offer substantially higher levels of integration and lower
power than competitive silicon solutions.
Broadcom seeks to leverage the explosive growth in Internet traffic, which
demands ten-fold increases in network bandwidth needs every two years. It
also intends to tap into WAN optical networking chip demand to earn a major
piece of the market forecast to be worth over $1.3 billion by 2001.
The NewPort transaction is expected to close within 60 days. Both boards
have approved the merger, which awaits approval by NewPort’s shareholders
and the satisfaction of regulatory requirements and other customary closing
conditions.
Broadcom expects to record a one-time write-off for purchased in-process
researcha
nd development expenses related to the acquisition in its third
fiscal quarter ending in September.