SAN FRANCISCOChip vendor Ikanos Communications Inc. plans to acquire Conexant Systems Inc.'s broadband access product line for $54 million under the terms of a definitive agreement between the two companies announced Wednesday (April 22).
Under the terms of the agreementunanimously approved by the boards of directors of both companiesIkanos (Fremont, Calif.) will also assume certain employee and facility related liabilities, the company said.
The transaction is expected to close in the third quarter of the year pending customary stockholder and regulatory approvals, Ikanos said.
Ikanos said it expects that the transaction will more than double the company's revenue and be accretive to its non-GAAP earnings per share within the first year after the close of the transaction.
In connection with this transaction, Tallwood Venture Capital has agreed to purchase 24 million shares of Ikanos common stock for $42 million, or $1.75 per share, according to Ikanos (Fremont, Calif.). Upon completion of the transactions, Tallwood (Palo Alto, Calif.) will own about 45 percent of the outstanding shares of Ikanos (excluding the warrants), Ikanos said.
Tallwood will also receive warrants to purchase an additional 7.8 million shares of common stock at $1.75 per share, Ikanos said. The warrants will have a term of five years.
Ikanos said the companies cumulatively account for 330 million broadband access ports shipped. Conexant's broadband access product line has traditionally been strong in North America and China, while Ikanos has led in Japan, Korea and Europe, Ikanos said.
"We'll use our strengthened leadership in broadband access as a platform on which to build new offerings that extend multi-play services seamlessly everywhere they are needed," said Michael Gulett, president and CEO of Ikanos, in a statement.
Following the completion of the transaction, Tallwood partners George Pavlov and Dado Banatao will join Ikanos' board of directors.