Broadcom Corporation to acquire Gigle Networks
Bangalore : Broadcom Corporation (Nasdaq: BRCM), a global leader in semiconductors for wired and wireless communications, on Tuesday announced that it has signed a definitive agreement to acquire Gigle Networks Inc., a privately-held company that develops system-on-a-chip (SoC) solutions for home networking over power lines.
Gigle Networks’ technology will widen the breadth of Broadcom’s intellectual property and enable the design of more highly integrated SoCs that allow whole-home network coverage in a wide variety of global deployment scenarios.
By adding powerline to its technology portfolio, Broadcom will be able to provide additional functionality to its customers in broadband home segments including set-top box, broadband carrier access and wireless router.
“The worldwide market has demanded technologies for powerline, coax and wireless networking using standards such as Wi-Fi, MoCA, HomePlug AV, IEEE 1901 and G.hn to allow the streaming of multiple high definition and 3D video streams,” said Jason Blackwell, Digital Home Practice Director, ABI Research.
“With electric outlets readily available around the home, more consumers are seeing the benefits of powerline, and service providers’ increased push toward gateways and IPTV is expected to help increase the market at a 32 percent compound annual growth rate from 2010 to 2015.”
Powerline networking uses existing electrical wiring to create an in-home network, enabling a cost-effective and efficient method to connect multiple devices and distribute digital content throughout the home.
In connection with the acquisition, Broadcom expects to pay approximately $75 million to acquire all of the outstanding shares of capital stock and other rights of Gigle Networks.
The purchase price will be paid in cash, except that holders of unvested employee stock options will receive Broadcom equity awards. Additional consideration of up to $8 million in cash will be reserved for future payment to the former holders of Gigle Networks capital stock and other rights upon satisfaction of certain performance goals.
A portion of the cash consideration payable to the stockholders will be placed into escrow to cover indemnity obligations.
Excluding any purchase accounting related adjustments or fair value measurements that are not estimable at this time, Broadcom expects the acquisition of Gigle Networks to be dilutive by approximately $0.01 per share in 2011.
The shareholders of Gigle Networks and the boards of directors of the two companies have approved the acquisition. The transaction is expected to close in the fourth quarter of 2010 and remains subject to customary closing conditions.
