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November 9, 2009

Cavium Networks to acquire MontaVista Software for $50m

To enter into embedded Linux software market

By CBR Staff Writer

Cavium Networks, a provider of integrated semiconductor products that enable intelligent processing for networking, wireless, storage and video applications, has signed a definitive agreement to acquire MontaVista Software for $50m, comprised of approximately $16m in cash and $34m in Cavium Networks common stock.

cavium said that the acquisition enables delivery of complete offerings for embedded device manufacturers and drives entry into high-growth embedded linux software market, creating new revenue opportunities. It said that the deal, which is expected to close in December 2009, will increase the company’s software and services revenue, and is expected to be gross margin and non-GAAP earnings accretive in 2010 and beyond.

MontaVista Software is a provider of multi-core embedded Linux operating systems, virtualisation, development tools and professional services with an array of Tier-1 customers.

According to Cavium, after the acquisition, MontaVista Software will run as a separate operating unit and will retain the MontaVista brand name. In addition, Cavium Networks will continue the MontaVista business model and support embedded Linux on multiple architectures from multiple processor vendors.

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In addition, MontaVista will maintain its own engineering, sales and product management staff. Its customers and partners will see no change in customer facing field operations and the web-based support and product download sites will be maintained.

Syed Ali, president and CEO of Cavium Networks, said: Software is becoming an increasingly important part of the total solution with the rapidly increasing adoption of multi-core processors. This acquisition will complement Cavium’s market leading processor portfolio with world-class software expertise and will enable us to deliver highly compelling and differentiated solutions to the market.

Rusty Harris, president and CEO of MontaVista Software, said: Embedded Linux is poised for rapid growth. By becoming part of Cavium Networks, MontaVista can confidently continue to offer industry leading commercial grade embedded Linux, support and services to our customers and partners.

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