Broadcom to Acquire Siliquent Technologies
[August 4, 2005]
Broadcom Corporation, a leading provider of chipsets for communications and home networking, has signed a definitive agreement to acquire Siliquent Technologies, a privately-held developer of 10 Gigabit Ethernet network interface controllers with advanced Ethernet processing technology for server networking, network storage and clustering applications. It develops Ethernet controllers that boost server performance and its technology enables servers to improve overall application performance while taking advantage of the emerging convergence of data, storage and clustering technologies into a single, standards-based Ethernet fabric.
The acquisition of Siliquent significantly accelerates Broadcom's delivery of 10GbE converged-NICs [C-NICs] for server LAN-on-motherboard [LOM] applications. According to NIC and LOM market share and forecast reports from Gartner Dataquest, 10GbE will be a significant market opportunity for enterprise networks since it enables a 10x increase in network bandwidth over today's 1GbE technology. This rise in bandwidth is driven by increased use and build out of the broadband network infrastructure, more desktops running 1GbE, growing usage of network-intensive applications and even greater amounts of user data stored and accessed on the network. Gartner Dataquest predicts that 10GbE technology will begin its volume ramp in servers beginning in 2007.
Blade servers are believed to be one of the likely early adopters of 10GbE C-NIC technology. By completely integrating multiple servers and a switch into a single chassis, the blade server's networking communications occurs over an internal electrically connected backplane. Through the use of low-cost serializers/deserializers [SerDes] technology, blade servers avoid the need for expensive, power-intensive optical transceivers and fiber optic cables associated with the deployment of 10GbE technology. Because 10 Gigabit Ethernet C-NICs are able to integrate the SerDes function, many blade servers that are already designed to support 10 gigabit speeds are ready to accept a 10GbE C-NIC solution.
The Siliquent 10GbE advanced Ethernet processing technology, combined with the use of low-cost 10 gigabit SerDes, enables a more simplified blade server design that can operate on a standard, single Ethernet fabric. The advantages of this 10GbE single fabric approach in the blade server environment are significant when contrasted against the current practice of implementing multiple communications fabrics [i.e. Ethernet for networking, Fibre Channel for block storage, proprietary solutions or Infiniband for clustering], each of which require a communications card on every server and a separate switch, consuming even more backplane space.
At closing of the acquisition, Broadcom expects to pay approximately $76 million in cash in exchange for all outstanding shares of capital stock and vested options of Siliquent. A portion of the consideration payable to the shareholders will be placed into escrow pursuant to the terms of the acquisition agreement. Broadcom will also assume all unvested employee stock options of Siliquent, which will entitle the holders to receive up to approximately 200,000 shares of Broadcom Class A common stock upon vesting.
The boards of directors of each of the companies and the shareholders of Siliquent have approved the merger. The closing, which is expected to occur during Broadcom's third fiscal quarter ending September 30, 2005, remains subject to customary closing conditions, including expiration of the waiting period under the Hart-Scott-Rodino Act. Broadcom may record a one-time charge for purchased in-process research and development expenses related to the acquisition in its third fiscal quarter. The amount of that charge, if any, has not yet been determined.
Siliquent Technologies, Inc. is a fabless semiconductor company dedicated to expanding Ethernet's applications across the entire enterprise - for storage, high-performance computing, and all networking applications. The company's new 10GbE processors are designed to enable a new generation of intelligent NICs that make it possible to run storage, networking and clustering over a single physical Ethernet interface - creating the unified wire. Founded in 2001, the company currently has 59 employees.
Broadcom Corporation is a leading supplier of highly integrated, system-level silicon solutions, which enable broadband digital communications to the home and within the business enterprise. The company's products enable the high-speed transmission of data over existing communications infrastructures, most of which were not originally intended for digital data transmission.
Using proprietary technologies and advanced design methodologies, the company has developed ICs for some of the most significant broadband communications markets including the markets for cable set-top boxes, cable modems, high-speed networking, satellite and terrestrial digital broadcast, and digital subscriber line [xDSL] applications.
Broadcom acquired Epigram in April 1999 to get high-speed home phoneline based networking technology. Armedia was acquired by Broadcom in May 1999 and is now known as Broadcom India Pvt. Ltd. Other strategic acquisitions include VisionTech [supplier of digital/audio MPEG-2 compression and decompression chips enabling Personal Video Recording (PVR), interactive videoconferencing, and Internet Protocol (IP) video streaming for the consumer electronics market]; SiByte [a developer of high-performance microprocessor solutions for broadband networking];Altima Communications [a supplier of networking integrated circuits for the small-to-medium business networking market].
The company is headquartered in Irvine [California]. Its shares are traded on the Nasdaq under the symbol: BRCM.
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