April 5, 2006 Santa Clara, CA -- PMC-Sierra, a provider of semiconductors for broadband communications and storage applications, has entered into a definitive agreement to acquire Passave, a developer of system-on-chip (SoC) semiconductor platforms for the FTTH and PON access markets. 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," comments Bob Bailey, chairman and CEO of PMC-Sierra. "PON is the ultimate 'triple play' access technology and is key to the build-out of the second generation FTTH-based broadband infrastructure."
Passave says its products enable service providers to offer converged "triple play" (voice, video, and data) services at bandwidth up to 1 Gbit/sec over PON-based equipment. The Passave product line includes SoC devices for optical line terminals (OLTs) for central office locations, as well as SoCs for optical network terminals (ONTs) and optical network units (ONUs) used as residential termination equipment. The company claims to have delivered two million ONU devices that have been deployed in NTT's (Tokyo, Japan) FTTH 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," remarks 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."
Passave employs approximately 150 employees worldwide and has facilities in Herzliya, Israel, Santa Clara, California, and Tokyo, Japan, as well as regional sales offices in Korea and China.
According to a press release, on February 27, 2006, PMC-Sierra's revenue outlook for the first quarter of 2006 was expected to be in the range of $85 to $88 million as provided on the company's mid-quarter update conference call. The revenue range provided at that time was based on the outlook for PMC-Sierra's existing business (revenue range: $78 to $80 million) as well as its recently acquired storage semiconductor business (revenue range: $7 to $8 million). As of this date, the company says it expects the business results for the first quarter to be in-line with the outlook provided on February 27, 2006.