Broadcom said that it has signed a definitive agreement to acquire Dune Networks, a privately-held company that develops switch fabric offerings for data centre networking equipment, in a move to expand its product portfolio for data centres and large scale cloud computing.
In connection with the acquisition, Broadcom expects to pay approximately $178m, 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.
Founded in 2000, Dune Networks is a semiconductor supplier of networking devices, facilitating the build of data centre, enterprise and carrier ethernet offerings. It has developed a chipset that supports bandwidth speeds of up to 100Gbps per port and can connect more than ten thousand servers (ports) in a single deployment. Its offices are located in Sunnyvale, California and Yakum, Israel.
A portion of the cash consideration payable to the stockholders will be placed into escrow pursuant to the terms of the acquisition agreement. Excluding any purchase accounting related adjustments and fair value measurements, Broadcom expects the acquisition of Dune Networks to be neutral to slightly accretive to earnings per share in 2010.
Martin Lund, vice president and general manager of network switching line of business at Broadcom, said: Dune’s massively scalable interconnect fabric, combined with our ethernet products, augments our portfolio of solutions for data centre networking equipment. This technology is particularly well suited to meet the emerging requirements for cloud computing networks at a large scale, and will enable us to address new market applications for ethernet in the data centre.
Boards of directors of the two companies have approved the merger. The closing, which is expected to occur by the end of first quarter ending March 31, 2010, remains subject to customary closing conditions.