x
Comms chips

Conexant, Globespan Merge

The Intersil Corp. (Nasdaq: ISIL) 802.11 chips are changing hands again. GlobespanVirata Inc. (Nasdaq: GSPN), which acquired the 802.11 line in August, today announced it will merge with Conexant Systems Inc. (Nasdaq: CNXT). (See Globespan-Intersil Deal Done and Conexant, Globespan to Merge).

Intersil, the 2002 market-share leader in 802.11 chip sales, faced new competition this year from Broadcom Corp. (Nasdaq: BRCM) and Intel Corp. (Nasdaq: INTC) (see Intel's A Train Arrives (At Last)). Now, it appears the merged Conexant-GlobespanVirata will take its shot on fending off the newcomers.

Conexant chairman and CEO Dwight Decker will chair the combined company, with Globespan chief executive Armando Geday taking the CEO seat. The combined company will employ 2,400 and use Globespan's Red Bank, N.J., facility as its headquarters.

Executives say it’s a merger of equals, but the numbers make it look more as if Conexant is acquiring Globespan. Each share of Globespan stock will be exchanged for 1.198 shares of Conexant, and Conexant shareholders will own 62.75 percent of the combined company. The new entity will carry a market capitalization of about $2.8 billion, with annual revenues of around $1.2 billion. Officials expect the deal to close before April.

One of the areas of overlap between the combined companies is in wireless LAN chipsets, as Conexant announced its 802.11b and 802.11g baseband/MAC chips earlier this year (see Conexant Intros 802.11 Chips and ITU Telecom Show Closes). However, the new company will likely favor the Intersil chips, which are actually shipping. Conexant is only "making investments and entering that space; obviously Globespan's position is much stronger," Decker says.

Shares of both companies were off in late afternoon trading on Monday as investors were still trying to make sense of the proposed marriage. Conexant shares fell $0.67 (11.47%) to $5.17 and Globespan shares dropped $0.06 (0.98%) to $6.09. — Craig Matsumoto, Senior Editor, Light Reading

Be the first to post a comment regarding this story.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE