WITH THE PENDING acquisition of Provigent, Broadcom is expanding its range of network-infrastructure and wireless solutions. Provigent, which specializes in microwave-backhaul technology, provides system-on-a-chip (SoC) solutions for cellular-infrastructure networks. Broadcom already provides a broad portfolio of Ethernet-networking solutions for service-provider infrastructure. With the addition of Provigent's engineering expertise in microwave-radio products, the company will be able to more thoroughly address the $5-billion microwave-backhaul equipment business.
To manage the surge in wireless traffic and transition to fourth-generation (4G) networks, carriers are faced with the challenge of backhauling data from cell sites to the core network. According to Broadcom, microwave point-to-point links are the most prevalent type of technology used in the multi-billion-dollar, global mobile-backhaul business. It represents more than 50 percent of all solutions.
Provigent is a privately held provider of mixed-signal semiconductors with offices in Israel and Santa Clara, CA. In connection with this acquisition, Broadcom expects to pay approximately $313 millionnet of cash assumedto acquire all of the outstanding shares of capital stock and other equity rights of Provigent. Although the purchase price will be paid in cash, a portion attributable to certain unvested employee stock options will be paid in Broadcom restricted stock units. In addition, a portion of the cash consideration will be placed into escrow pursuant to the terms of the acquisition agreement.
Broadcom expects the acquisition of Provigent to be neutral to earnings in 2011. The boards of directors for the two companies have approved the merger. The transaction is expected to close in the second quarter of this year.