The saga surrounding the fate of struggling wireless kit vendor Proxim Corp. (Nasdaq: PROX) has taken another surprise twist, with an announcement that the company is to be acquired by broadband wireless player Terabeam Wireless (Nasdaq: YDIW) for approximately $28 million.

The move comes only five weeks after Moseley Associates Inc. announced its intention to buy the firm for $21 million (see Proxim Sells Assets for $21M).

According to a joint statement today from Terabeam and Proxim, both companies agreed to the deal “after Proxim declared Terabeam the high bidder in the court-approved auction held in connection with Proxim’s Chapter 11 bankruptcy filing.”

The statement notes that the agreement “is expected to supersede Proxim’s earlier arrangements to sell substantially all of its assets to Moseley Associates.”

The deal is scheduled to close by the end of this month following final approval by the U.S. Bankruptcy Court for the District of Delaware. Terabeam has stated its intention to move its headquarters to Proxim’s San Jose, Calif., facility and will continue to develop Proxim’s wireless LAN, broadband wireless, and WiMax products.

Terabeam itself merged with YDI Wireless, a microwave wireless kit provider, in April 2004 (see Terabeam Goes for Peanuts). As a startup, Terabeam burnt through nearly $500 million in funding in just a few years, touting a controversial "gigabit" free space optics (FSO) technology that was heavily talked up by some analysts (see The Truth About TeraBeam ).

Lately the merged company has been trying to break into the emerging WiMax equipment provider market (see Terabeam Maxes With Fujitsu). Clearly, this is one of the major reasons that it has made its moves on Proxim, which already has an established broadband wireless of point-to-point and multipoint kit portfolio and is working on WiMax. Proxim's development work on WiMax equipment has so far used the Intel Corp. (Nasdaq: INTC) chipset, while Terabeam has been using silicon from Fujitsu Ltd. (Tokyo: 6702; London: FUJ).

Neither Moseley, Proxim, nor Terabeam were available for comment at press time.

— Justin Springham, Senior Editor, Europe, Unstrung
Dan Jones, Site Editor, Unstrung, contributed to this story.