JUNE 26, 2007 -- Legerity Inc. (search for Legerity) has entered into an agreement to be acquired by Zarlink Semiconductor Inc. (search for Zarlink). Under the terms of the agreement, Zarlink will acquire Legerity Holdings, Inc. for US$134.5 million in cash, subject to working capital adjustments. The transaction is expected to close in late July, subject to closing conditions, including expiration or termination of the waiting period under the U.S. Hart-Scott-Rodino Antitrust Act. Merrill Lynch acted as exclusive financial advisor to Legerity in connection with the transaction.
"Combining Zarlink and Legerity creates a well positioned semiconductor company with the scale necessary to compete effectively in a consolidating and growing network communications industry," said Hank Perret, president and CEO, Legerity. "Legerity brings to Zarlink field-proven technologies, engineering knowledge, and established customer relationships to help build a fast-growing, profitable company."
"This acquisition will expand and accelerate Zarlink's plans for the voice-over-packet market," said Kirk K. Mandy, president and CEO, Zarlink Semiconductor. "Both companies are designing complementary technologies that enable high-quality voice services. We share a very similar customer base but are not direct competitors. As a result, we expect there to be substantial cross-selling opportunities across a larger customer base and plan to deliver more integrated, higher-value solutions for the rapidly growing voice-over-Internet and voice-over-cable markets."
Legerity's growth is fueled by service providers, including telephone and cable system operators, who are bundling triple-play telephone, television, and Internet services for enterprise and residential customers. With the continued evolution to next-generation packet networks and the global availability of broadband connectivity, equipment manufacturers have designed Legerity's products into fiber-based access equipment as well as cable and DSL residential gateways. Over the past three years Legerity has grown revenue from US$88 million in calendar year 2004 to US$113 million in calendar year 2006. For the calendar year 2006, income from operations was US$5.1 million and net income was US$4.1 million.
Perret will lead the creation of a combined network communications product portfolio. He will report to Zarlink's Mandy. "A number of Legerity's executives" will join Zarlink's management team, according to Legerity.
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