SAN FRANCISCO—Cavium Networks Inc. has signed a definitive agreement to acquire Beijing-based fabless chip firm Celestial Semiconductor Co. Ltd. in a cash and stock deal worth $55 million, the company said Monday (Jan. 31).
Celestial Semiconductor is a provider of ARM-based SoCs for a range of digital media applications. The acquisition is expected to close by the end of the quarter, Cavium said.
The deal includes a provision which can increase the purchase price by up to $10 million if certain goals are reached in the next 12 months, Cavium said.
Syed Ali, Cavium's president and CEO, said combing Cavium's technologies with Celestial Semiconductor's would enable compelling and differentiated end-to-end solutions for the entire digital video cycle.
"We see highly integrated, low cost and low power SoC solutions enabling a range of cable, internet and over-the-top content applications," Ali said.
Cavium announced the Celestial deal after reporting fourth quarter sales of $59.8 million, an increase of 8 percent compared with the previous quarter and 86 percent compared to the fourth quarter of 2009. The company posted a net income in accordance with generally accepted accounting principles (GAAP) of $34.6 million, or 70 cents per diluted share, compared to a GAAP net income of $5 million in the previous quarter and a net loss of $4.5 million in the year ago quarter.
Fourth quarter sales came in just above consensus analysts' expectations, which called for the company to post revenue of $59.1 million, according to Yahoo Finance.
Also Monday, Cavium appointed Rajiv Khemani to the position of chief operating officer. Khemani, who previously served as vice president and general manager of Cavium's Networking and Communications Division, will continue to report to Ali.