Making a move that the company says will make it the leader in wireless networking equipment, Proxim Corp. Monday said that it has agreed to purchase Agere Systems Inc.'s wireless networking equipment business for US$65 million in cash.
Acquiring Agere's wireless business was "an opportunity we could not afford to pass up," said Jonathan Zakin, Proxim's chairman and chief executive officer on a conference call held Monday.
The deal also includes a three-year licensing and supply deal, as well as a settlement to the patent litigation suit between the companies.
Under terms of the deal, which is expected to close in 60 days, pending regulatory approval, Proxim will acquire Agere's line of 802.11b wireless networking equipment, including the Orinoco product line and other products for small business, home, enterprise and service provider environments, the companies said in a joint release.
Agere, which is based in Allentown, Pennsylvania, will retain its wireless chip, module and card businesses, the companies said. Though Agere will retain its overall wireless access card business, Proxim will acquire the Orinoco-branded wireless cards, said Proxim's Zakin.
The agreement "adds depth and breadth to our product portfolio," Zakin said.
Proxim President and Chief Operation Officer David King went even further than that, saying on the conference call that the deal was "a major transforming event for the company" and that it was "strategically, the most important deal that's happened in the wireless LAN industry since its genesis, on the systems side of the business."
King said he expects the deal will help boost Proxim's fortunes in the enterprise, as well as in public LANs, such as those planned for coffee shops and parks.
Despite King's enthusiasm for the acquisition, Jason Smoleck, enterprise networks analyst with IDC called the deal "not monumental."
The news is "indicative of both companies trying to tighten their strategies," with Agere looking to concentrate on its chips and modules business and Proxim looking to push into new markets domestically and overseas, he said.
The deal is especially sweet for Proxim, Smoleck said, as "this is a really cheap acquisition" and the Orinoco product line is widely used worldwide.
The companies will also enter into a three-year agreement in which Agere will supply Proxim, which is located in Sunnyvale, California, with wireless chips, modules and cards, as well as a license to the Agere technology used in the Orinoco product line, the companies said. The companies will also cross-license a number of their patents under the deal and settle a patent infringement suit filed by Agere in May 2001.
In that suit, Agere charged that Proxim was infringing on its patents concerning multirate communications systems and antennas, among other issues.
Proxim financed the deal thanks to a $75 million investment in company stock from Warburg Pincus LLC and Broadview Capital Partners.
Monday's deal is the second such acquisition for Proxim in the first half of the year. In January, Proxim and high-speed wireless firm Western Multiplex Corp. merged in a $550 million deal, based on then-current market capitalization.