Proxim, Netopia Call Off the Wedding

Wireless broadband networking company Proxim Inc. has called off its efforts to acquire broadband Internet equipment developer Netopia Inc., citing “current market conditions.”

The termination of the merger could be a major blow to Proxim’s plans.

David King, chairman, president and chief executive officer of Proxim, told investors in a conference call Wednesday that the merger was an important part of the company’s strategy going forward. The merger was intended to aid Proxim’s push to OEM its technology and create its own niche in the wholesale market.

The merger with Netopia was designed to expand Proxim’s broadband networking strategy by providing the company access to DSL and other major loop technologies.

However, the companies said they will continue to work closely as strategic partners. Netopia said it will integrate Proxim’s HomeRF technology into Netopia’s family of broadband routers and integrated access devices.

“Although we are disappointed that the merger did not proceed as planned, this development has not changed Proxim’s strategic focus,” King said. “Proxim will collaborate with Netopia and other leading companies to develop state-of the-art broadband access solutions with highly-integrated wireless networking capabilities.”

The failure of the merger comes hard on the heels of reports that Intel is abandoning its exclusive focus on the HomeRF home networking technology Proxim provides. King told investors Wednesday that Intel has not abandoned HomeRF altogether, but will also begin bringing out 802.11b networking products.

“Intel will continue to be a partner, however, they are now adopting a dual product strategy for home networking,” King said.

King also noted that Proxim has been strengthening its relationships with Motorola and Siemens.

Sunnyvale, Calif.-based Proxim announced its intent to merge with Alameda, Calif.-based Netopia last January in a stock-for-stock deal that was valued at about $223 million at the time.

Proxim was to exchange .3 shares of its stock for each common share of Netopia . At the time of the announcement Proxim stock was going for about $37 a share; yesterday it closed at $10.37.

The companies said today that they “have mutually agreed to terminate their agreement and plan of reorganization…without payment of any termination fees.”

Proxim was up 7 percent or 72 cents on the news in early trading. Netopia was down 15 cents to $3.43.

Thor Olavsrud contributed to this report.