Last November, Passave postponed its IPO due to legal problems. The start-up develops system-on-chip solutions for the Fiber-to-Home market.
PMC-Sierra, Inc. (NASDAQ: PMCS), a leading provider of broadband communications and storage semiconductors, last night announced that it has entered into a definitive agreement to acquire Israel's Passave Inc.
The acquisition price of approximately $300 million is expected to be paid through the issuance of PMC-Sierra common stock.
Passave is a developer of system-on-chip semiconductor solutions for the Fiber To The Home (FTTH) access market.
In November, 2005, Passave postponed a scheduled Nasdaq IPO because of legal problems, reportedly a lawsuit over marketing issues filed by its third largest customer UTStarcom (Nasdaq:UTSI). Before the problems arose, Passave was planning to raise $75 million at a company value of $197 million.
Passave employs approximately 150 employees worldwide and has facilities in Herzliya, Israel; Santa Clara, California; and Tokyo, Japan; and regional sales offices in Korea and China.
Passave was founded in 2001. Its three main shareholders are BRM Capital, Walden Israel, and Eurofund, each of which owns 18.6%. The two founders own 7.9% each, including options. Intel Capital owns 7.4%, and RSIS Trust, headed by Analog Devices founder and chairman Ray Stata, owns 12.3%.
PMC-Sierra chairman and CEO Bob Bailey said yesterday, "Our acquisition of Passave brings PMC-Sierra an experienced and highly innovative team with clear market share leadership in Passive Optical Networking (PON) 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. PON is the ultimate Triple Play access technology and is key to the build-out of the second generation FTTH-based broadband infrastructure."
Based on analyst estimates and service provider announcements, it is estimated that between 45 and 60 million homes worldwide will be connected using PON technology by 2010.
Passave's solutions enable service providers to offer so-called "Triple Play" services (voice, video and data) at up to 1Gbps over PON-based equipment.
The Passave product line includes system-on-chip solutions for optical line terminals (OLTs) for the central office, optical network terminals (ONTs), and ptical network units (ONUs) solutions for residential termination equipment. Passave has delivered 2 million ONU devices that have been deployed in NTT's FTTH broadband access network.
Passave CEO Victor Vaisleib said, "FTTH is a key enabler for Triple Play and digital home applications. 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."
Published by Globes [online], Israel business news - www.globes.co.il - on April 5, 2006