has signed a definitive agreement to acquire Gigle Networks
, a privately-held company that develops system-on-a-chip solutions for home networking over power lines.
When combined with Broadcom's world-class portfolio of wired and wireless solutions for the home, Gigle Networks' technology will widen the breadth of Broadcom's intellectual property and enable the design of more highly integrated SoCs that allow whole-home network coverage in a wide variety of global deployment scenarios. By adding powerline to its technology portfolio, Broadcom will be able to provide additional functionality to its customers in broadband home segments including set-top box, broadband carrier access and wireless router.
Powerline networking uses existing electrical wiring to create an in-home network, enabling a cost-effective and efficient method to connect multiple devices and distribute digital content throughout the home. Gigle Networks' powerline networking technology is HomePlug AV certified and is designed to be compliant with the IEEE 1901 standard for high speed powerline communications. Gigle Networks is a member of the HomePlug Powerline Alliance, an organization responsible for establishing standards and testing devices for compliance and interoperability. HomePlug AV and IEEE 1901 solutions complement other networking technologies for the connected home. For example, a combined home network of powerline networking, MoCA and Wi-Fi enhances advanced applications like high definition video streaming, enabling a whole-home connected environment. The acquisition will also accelerate Broadcom's time to market for G.hn, a new draft specification for existing-wire home networking, developed under the International Telecommunication Union.
In connection with the acquisition, Broadcom expects to pay approximately $75 million to acquire all of the outstanding shares of capital stock and other rights of Gigle Networks. The purchase price will be paid in cash, except that holders of unvested employee stock options will receive Broadcom equity awards. Additional consideration of up to $8 million in cash will be reserved for future payment to the former holders of Gigle Networks capital stock and other rights upon satisfaction of certain performance goals. A portion of the cash consideration payable to the stockholders will be placed into escrow to cover indemnity obligations. Excluding any purchase accounting related adjustments or fair value measurements that are not estimable at this time, Broadcom expects the acquisition of Gigle Networks to be dilutive by approximately $0.01 per share in 2011. The shareholders of Gigle Networks and the boards of directors of the two companies have approved the acquisition. The transaction is expected to close in the fourth quarter of 2010 and remains subject to customary closing conditions.