Broadcom to acquire Dune Networks for $178 million

Global semiconductors maker for wired and wireless communications Broadcom Corporation has agreed yesterday to buy privately held Dune Networks for around $178 million in cash to expand its range of data centre networking equipment products.

Held by private equity firms, the US-  and Israel-based Dune Networks develops switch fabric solutions for data centre networking equipment. Data centres are scaling to provide significantly more bandwidth to meet the requirements of cloud computing, where computing resources, products and services, such as Software as a Service (SaaS), can be delivered real-time over the Internet.

California-based Broadcom said that it will pay approximately $178 million, net of cash assumed from Dune Networks, to acquire all of the outstanding shares of capital stock and other rights of Dune Networks.

The purchase price will be paid in cash, except that a portion of such purchase price attributable to unvested employee stock options will be paid in Broadcom restricted stock units.

A portion of the cash consideration payable to the stockholders will be placed into escrow pursuant to the terms of the acquisition agreement. The boards of directors of the two companies have approved the merger. The closing, which is expected to occur by the end of Broadcom's first quarter ending March 31, 2010, remains subject to customary closing conditions.

Broadcom is one of the world's largest fabless semiconductor companies, with 2008 revenue of $4.66 billion, and holds over 3,650 US and over 1,450 foreign patents. It has one of the broadest intellectual property portfolios in both wired and wireless transmission of voice, video, data and multimedia.

Dune Networks has developed a scalable chipset that supports bandwidth speeds of up to 100Gbps per port and can connect more than ten thousand servers (ports) in a single deployment.

The company offers SAND fabric that is used to build a single and unified hardware-switching platform for carrier core and edge router platforms, carrier Ethernet switching platforms, carrier next generation packet transport platforms, enterprise Ethernet switches and routers, and data centre switching platforms. It also provides FAP devices that work as stand-alone traffic managers.