PMC-Sierra has entered into a definitive agreement to acquire Passave

April 4, 2006

2 Min Read

SANTA CLARA, Calif. -- PMC-Sierra, Inc. (NASDAQ: PMCS - News), a leading provider of broadband communications and storage semiconductors, today announced that it has entered into a definitive agreement to acquire Passave Inc., a leading developer of system-on-chip semiconductor solutions for the Fiber To The Home (FTTH) access market. Based on analyst estimates and service provider announcements, it is estimated that between 45 and 60 million homes worldwide will be connected using Passive Optical Networking (PON) technology by 2010. The acquisition price of approximately $300 million is expected to be paid through the issuance of PMC-Sierra common stock. The deal is expected to close within April 2006 and is conditioned upon the receipt of normal governmental rulings. PMC-Sierra expects the acquisition will be neutral to earnings in the near term and accretive in three quarters based on expected revenue growth.

"Our acquisition of Passave brings PMC-Sierra an experienced and highly innovative team with clear market share leadership in Passive Optical Networking solutions. This acquisition fits with our strategic intent to address the high-growth Fiber Access market and is aligned with PMC's developments in Customer Premises Equipment," said Bob Bailey, Chairman and CEO. "PON is the ultimate Triple Play access technology and is key to the build-out of the second generation FTTH-based broadband infrastructure."

Passave's solutions enable Service Providers to offer so-called "Triple Play" services (voice, video and data) at up to 1Gbps over PON-based equipment. The Passave product line includes system-on-chip solutions for Optical Line Terminals (OLTs) for the Central Office, Optical Network Terminals (ONTs), and Optical Network Units (ONUs) solutions for residential termination equipment. Passave has delivered two million ONU devices that have been deployed in NTT's Fiber To The Home broadband access network.

"FTTH is a key enabler for Triple Play and Digital Home applications. As these significant opportunities unfold worldwide, we are excited to join forces with a public company with such an established international presence in the communications semiconductor market," said Victor Vaisleib, CEO of Passave. "There are natural synergies between our products, technologies and channels, and PMC-Sierra's capabilities will enhance the product offering, quality and support we are offering our customers," he added.

PMC-Sierra Inc. (Nasdaq: PMCS)

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