Wireless Systems Design

Acquisitions Prove Bluetooth's Worth

The Bluetooth standard has suffered a lot of abuse. When it came on the scene, it was heralded as the wireless-connectivity solution to just about everything. Eventually, the industry recognized that the standard's future would be confined by features like short range and low power. Yet Bluetooth still targeted viable application areas, so products began coming to market. Then, Bluetooth went quiet—that is, until two major players revealed their plans to acquire Bluetooth companies.

First, Broadcom Corp. (www.broadcom.com) announced that it had signed a definitive agreement to acquire WIDCOMM, Inc. (www.widcomm.com). By combining WIDCOMM's software and Broadcom's Bluetooth semiconductor portfolio, Broadcom should be able to provide complete, optimized system solutions (SEE PHOTO). The acquisition also enlarges Broadcom's customer base, as WIDCOMM software ships in nearly 100 end products from more than 80 customers. WIDCOMM's software stacks have been broadly adopted within the Bluetooth industry. That software also includes a complete suite of Bluetooth usage profiles.

In connection with the acquisition, Broadcom agreed to pay approximately $49.0 million in shares of its Class A common stock issued or reserved for future issuance in exchange for all outstanding shares of WIDCOMM's capital stock and other rights. The company has since completed this acquisition. In the end, Broadcom elected to consummate the acquisition entirely with cash consideration. Con-sequently, it will pay approximately $49.0 million in cash in exchange for all of the outstanding shares of capital stock and other rights of the privately held WIDCOMM. A portion of the consideration paid will be subject to escrow pursuant to the terms of the acquisition agreement. Broadcom may record a one-time charge for purchased in-process research and development expenses related to the acquisition in its second fiscal quarter, which ends June 30. The amount of that charge, if any, has not yet been determined.

Just a few days after Broadcom announced its initial plans, RF Micro Devices, Inc. (www.rfmd.com) revealed that it had signed a definitive agreement to acquire Silicon Wave, Inc. (www.siliconwave.com). This acquisition has not yet been finalized. However, RFMD has revealed that Silicon Wave will be incorporated into its wireless-connectivity business unit. This unit focuses on developing and producing components and system-on-a-chip (SoC) solutions for Bluetooth, Global Positioning Systems (GPSs), and wireless-local-area networks (WLANs). Silicon Wave's Bluetooth product portfolio includes highly integrated single-chip CMOS radio processors as well as standalone CMOS-radio-modem solutions. The CMOS Bluetooth-radio processors have a unique architecture that doesn't require external Flash memory or RF components.

In connection with this acquisition, RFMD will pay approximately $10.8 million in cash in exchange for all outstanding shares of Silicon Wave capital stock that it doesn't already own. Additionally, if certain revenue performance goals for the years ending March 31, 2005 and 2006 are met, RFMD will pay additional amounts in cash to the shareholders of Silicon Wave. The boards of directors of both companies have approved the merger, which awaits approval by Silicon Wave's shareholders and other customary closing conditions. The merger transaction is expected to close this month.

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