Conexant, GlobespanVirata to Merge

Looking to become the leading provider of broadband-driven products for the
home, Conexant Systems and GlobespanVirata Monday agreed to merge in a stock deal with about $969.5

Under the terms of the deal, GlobespanVirata shareholders will receive 1.198
shares of Conexant common stock for each share of GlobespanVirata stock.
Based on the share counts for the two companies as of market close on
Friday, October 31, Conexant and GlobespanVirata shareholders will own 62.75
percent and 37.25 percent, respectively, of the combined entity.

Newport Beach, Calif., Conexant makes home network processors, ADSL
modems multimedia decoders and encoders and wireless
networking technologies. GlobespanVirata, formed through the merger of
GlobeSpan and Virata and headquartered in Red Bank, N.J. creates integrated
circuits, software and systems for digital subscriber-line applications.

The goal is to create a business that will infiltrate the lucrative market
for consumer products that are powered by broadband in the home.
Specifically, Conexant and GlobespanVirata envisions a “digital home” where
a network pipes broadband Internet access and links devices such as personal
computers, printers and game consoles using both wired and wireless

Conexant and Globespan are hardly alone in their theory. Companies such as
Microsoft and Cisco are banking on the promise of home digital entertainment
networks, where consumers rely on IT instead of traditional cable boxes to
feed digital video and audio content through their PCs and, eventually,
connect products such as personal digital assistants, digital cameras, MP3
players, and other handheld gadgets.

Microsoft would love to see its Windows-based PCs and corresponding media
software and applications drive home networks. Cisco plucked
Linksys, a a leading manufacturer of home networking products for consumers
and small office/home office (SOHO) users, from the infrastructure patch for
about $500 million earlier this year.

Research firms such as In-stat/MDR claim broadband digital home networks
will eventually include stereos, set-top boxes, televisions, and home
security and automation systems and garner a multi-billion dollar

“With the addition of GlobespanVirata’s highly complementary product
portfolio, we gain key end-to-end digital subscriber line connectivity with
a leading position in central office applications worldwide,” said Dwight W.
Decker, Conexant chairman and chief executive officer who will become the
combined company’s chairman. “We also benefit by adding GlobespanVirata’s
leadership position in wireless local area networking, a critical technology
for the digital home.

The combined company will retain the Conexant name and its stock will
continue to trade on the Nasdaq market under the ticker symbol “CNXT.”
Current GlobespanVirata CEO Armando Geday will serve as chief executive
officer of the company and his colleague Matt Rhodes will serve as
president. The board of directors of the combined company will have 12
members, with Conexant designating seven directors, including Decker, and
GlobespanVirata designating Geday and four others.

The combined organization would be valued at about $2.8 billion based on the
market values of each company on October 31 and will employ some 2,400
people worldwide. The organization would remain headquartered at
GlobespanVirata’s current headquarters in Red Bank.

The transaction is expected to close in the first quarter of calendar 2004.

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