GlobeSpan Inc. and Virata Corp. have jointly announced that they have signed a definitive agreement to combine in a strategic merger creating the world’s leading provider of integrated circuits, software and system designs for Digital Subscriber Line (DSL) solutions.
According to a statement, the stock-for-stock transaction, which was approved by the boards of directors of both companies, will create a combined enterprise with the most complete range of broadband access chipset solutions in the expanding DSL market.
The new company, which will be called GlobeSpan Virata, will provide complete high-speed DSL access solutions to more than 300 customers that manufacture broadband access equipment enabling a full range of voice, video and data services for businesses and consumers.
Under the terms of the merger agreement, Virata stockholders will receive 1.02 shares of GlobeSpan common stock for each Virata common share held. After the merger is completed, on a fully diluted basis, GlobeSpan stockholders will own approximately 52.5% of the combined company, and Virata’s stockholders will own approximately 47.5% of the combined company.
The companies expect the transaction to generate annual synergies of approximately $30-$35 million beginning in the first full year following completion of the transaction, which is expected to occur within three to six months.