Integrated circuit, software and system design company GlobeSpan Inc. is acquiring communications software and semiconductor maker Virata Corp. in a $1.3 billion deal that is expected to create a DSL powerhouse.
The companies said they “share a vision to create the premier communications semiconductor company.”
Red Bank, N.J.-based GlobeSpan said the all-stock deal will create a new company in the Digital Subscriber Line solutions space to be called GlobeSpan Virata, which will have pro forma revenues of $528 million for the 12 months ended June 30, 2001.
Shareholders of Santa Clara, Calif.-based Virata will receive 1.02 shares of GlobeSpan common stock for each share they own.
The new company is expected to have approximately $700 million of pro forma cash and cash equivalents and debt of approximately $135 million, executives said.
After the merger is completed, on a fully diluted basis, GlobeSpan stockholders will own approximately 52.5 percent of the combined company.
The companies said they expect the transaction to generate annual synergies of $30 million to $35 million beginning in the first full year following completion of the transaction.
GlobeSpan was down 50 cents to $8.54 shortly after the opening bell today. Virata was down $1.48 to $8.50.
Armando Geday, president and CEO of GlobeSpan, will be chief executive officer of the combined company. Charles Cotton, Virata, CEO, will be executive chairman of the combined company.
