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Ikanos to pay Conexant $54M for broadband product line

Wed, 04/22/2009 - 8:25am
Mike Robuck

Fremont, Calif.-based Ikanos Communications said today that it has agreed to buy the broadband access product line from Conexant Systems for $54 million in cash and the assumption of certain employee and facility-related liabilities.

Ikanos, a provider of broadband semiconductor and software products for digital homes, said the deal with Newport Beach, Calif.-based Conexant was expected to close in the third quarter of this year once it passes customary closing conditions.

In connection with the deal, Tallwood Venture Capital, an investment firm focused on the semiconductor industry, has agreed to purchase 24 million shares of Ikanos common stock for $42 million, or $1.75 per share. Tallwood will also receive warrants to purchase an additional 7.8 million shares of common stock at $1.75 per share. The warrants will have a term of five years.

Upon completion of the transaction, Tallwood Venture Capital will own approximately 45 percent of the outstanding shares of Ikanos. In addition, following the transaction, George Pavlov, general partner, and Dado Banatao, managing partner, will join Ikanos' board of directors.

Ikanos said the deal will more than double the company’s revenue, while providing significant leverage in its cost and spending structure.

“With the number of home networks doubling to more than 400 million by 2013 according to analysts, there’s a substantial opportunity for Ikanos to address the need for delivering bandwidth to and throughout the home,” said Michael Gulett, president and CEO of Ikanos.

Ikanos also reported its first-quarter results today. Revenue in the first quarter, which ended March 29, was $20.7 million, compared with revenue of $22.8 million for the fourth quarter of 2008 and revenue of $29.7 million for the first quarter of 2008.

Net loss for the first quarter of 2009 was $6.1 million, or 21 cents per share, on 29.1 million weighted average outstanding shares. This compares with a net loss of $5.7 million, or 20 cents per share, on 28.9 million weighted average shares in the fourth quarter of fiscal 2008, and with a net loss of $4.8 million, or 16 cents per share, on 29.5 million weighted average shares in the first quarter of 2008.

More Broadband Direct 04/22/09:
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•  Cox a finalist for TM Forum Excellence Award
•  Cablevision's Rutledge reelected NCTA board chairman
•  AT&T to shut down Internet phone service
•  Ikanos to pay Conexant $54M for broadband product line
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•  SeaChange signs 4-year contract with Virgin Media
•  Netflix slumps; analyst sees looming competition
•  Yahoo's feeble Q1 triggers nearly 700 more layoffs
•  Broadband Briefs for 04/22/09

 

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