SigmaTel (Austin, Texas) signed a definitive agreement to acquire Protocom, a privately held provider of semiconductors to the multi-function imaging market, for $47 million in cash and stock. SigmaTel said the acquisition would provide key technologies applicable to its core audio business, give the company its first imaging applications product line and provide technology that can be leveraged into several emerging multimedia consumer electronics markets.

SigmaTel paid an undisclosed amount of cash to D&M Holdings for the Rio assets. SigmaTel said this acquisition would combine Rio's Cambridge, England-based design team with SigmaTel's existing designers. The company said the acquisition also broadens SigmaTel's intellectual property (IP) base, particularly in the expanding hard disk drive (HDD) MP3 player market segment.

The Rio acquisition does not include any rights to ownership of the portable audio player products, inventory or trademarks associated with the Rio brand, SigmaTel said. It does, however, include as many as 15 patents and patent applications, some of which are among the earliest MP3 player patents ever granted and many of which have been granted or are pending in Europe and Asia, according to SigmaTel.

Under the terms of the Protocom deal, SigmaTel will acquire Protocom's business, including technology assets, current products, customers and IP for a combination of stock and $18.8 million in cash.

Protocom employees, more than half of which are engineers, will become full-time SigmaTel employees and remain in their current locations. Additionally, SigmaTel said Protocom's Cupertino, Calif. facility would become its West Coast Imaging Center.

In a statement issued Tuesday, Ron Edgerton, SigmaTel president and CEO, said the company is dedicated to a strategy of ongoing product diversification.

"SigmaTel commits to new market segments when we have compelling technology and a strong business plan that justifies investing in new products for those markets," Edgerton said. "The market for portable multimedia devices is growing and video is becoming more important to the markets we serve. As we look toward introducing a new generation of multimedia chips, the features, flexibility and greater ease of implementation brought by Protocom are key parts of our strategy to broaden SigmaTel's leadership in the portable multimedia SoC market."

SigmaTel said it expects the acquisition of Protocom to increase its technology portfolio and its architecture and system design capabilities to meet the form, fit and function requirements for devices such as digital video cameras, personal media players (PMPs), video conferencing, remote security cameras, digital still cameras and multimedia mobile phones.