DECEMBER 1, 2009 -- Broadcom Corp., a supplier of semiconductors for wired and wireless communications, has signed a definitive agreement to acquire Dune Networks, a privately held company that develops switch fabric technologies for data-center networking equipment. Data centers are scaling to provide significantly more bandwidth to meet the requirements of cloud computing, where computing resources, products, and services, such as Software as a Service (SaaS), can be delivered in real time over the Internet. Dune Networks has developed a scalable chipset that supports bandwidth speeds up to 100 Gbps per port and can connect more than 10,000 servers (ports) in a single deployment.
"Dune's massively scalable interconnect fabric, combined with our Ethernet products, augments our portfolio of solutions for data center networking equipment," says Martin Lund, vice president and general manager for Broadcom's Network Switching line of business. "This technology is particularly well suited to meet the emerging requirements for cloud computing networks at a large scale, and will enable us to address new market applications for Ethernet in the data center."
"Dune Networks' distributed connection fabric is a complement to Broadcom's existing product suite," adds Eyal Dagan, chief executive officer, Dune Networks. "Our joint customers will be able to bring to market low-cost, high-performance data-center switching that will enable end users to build next-generation cloud computing networks."
In connection with the acquisition, Broadcom expects to pay approximately $178 million, net of cash assumed from Dune Networks, to acquire all of the outstanding shares of capital stock and other rights of Dune Networks. The purchase price will be paid in cash, except that a portion of the purchase price attributable to unvested employee stock options will be paid in Broadcom restricted stock units. A portion of the cash consideration payable to the stockholders will be placed into escrow pursuant to the terms of the acquisition agreement. Excluding any purchase accounting related adjustments and fair value measurements, Broadcom expects the acquisition of Dune Networks will be neutral to slightly accretive to earnings per share in 2010. The boards of directors of the two companies have approved the merger. The closing, which is expected to occur by the end of Broadcom's first quarter ending March 31, 2010, remains subject to customary closing conditions.
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