The combined company will target the broadband digital market, including DSL and wireless LANs.
RED BANK, N.J. (AP) - Semiconductor company Conexant Systems Inc. agreed to acquire GlobespanVirata Inc., a maker of broadband communications products, for about $969.5 million in stock.
The combined company will target the broadband digital market, including digital-subscriber line connectivity and wireless local-area networking.
Conexant, of Newport Beach, Calif., sells products used in digital subscriber lines and cable-modem solutions. GlobespanVirata, based in Red Bank, N.J., was formed through the merger of GlobeSpan and Virata. It provides integrated circuits, software, and systems designs for digital subscriber line applications.
The deal, approved by the boards of both companies, is expected to close in the first quarter of 2004.
Under the agreement, GlobespanVirata shareholders will receive 1.198 shares of Conexant for each share held. Conexant will own 62.75 percent of the combined company, with GlobespanVirata holding the remaining 37.25 percent stake.
Based on Conexant's Friday closing of $5.84 a share, GlobespanVirata is valued at about $7 a share, a 14 percent premium to the company's Friday closing price. As of Sept. 30, GlobespanVirata has about 138.5 million shares outstanding.
Conexant chairman and chief executive Dwight W. Decker will take on the role as chairman of the combined company, while GlobespanVirata's president and chief executive, Armando Geday, will assume the post of CEO. Matthew Rhodes, Conexant's president, was named president of the combined company.
The combined company will employ about 2,400 people and will keep the Conexant name, but have its headquarters in Red Bank, N.J., GlobespanVirata's current home.
Both companies reported quarterly results last Thursday. For its fiscal fourth quarter ended Sept. 30, Conexant swung to a profit of $37.2 million, and revenue rose 24 percent to $164.7 million. GlobespanVirata posted a slightly wider net loss of $31.3 million for its third quarter, hampered by several items. The company's quarterly revenue, however, doubled to $98.8 million.
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