10/16/2002 - RF Micro Devices, a leading provider of proprietary radio frequency integrated circuits (RFICs) for wireless communications applications, announced it has agreed to purchase Resonext Communications, a privately held company providing complete, highly integrated CMOS WLAN solutions for 802.11a and multi-band (802.11a/b/g) platforms.
The acquisition of Resonext would significantly expand RFMD's total addressable market, complement the Company's growing presence in 802.11b products and leverage the Company's expertise in multi-standard power amplifiers (PAs). Resonext's product portfolio focuses on 802.11a and emerging multi-band WLAN technologies (802.11a/b/g). Recently, Resonext announced the production of its first 802.11a chipset and the introduction of a multi-band chipset for 802.11a/b/g applications. The 802.11a/b/g chipset consists of two chips: a dual-band CMOS radio and a multi-protocol baseband/MAC chip. RF Micro Devices currently has a complementary offering of radio and baseband components for 802.11b applications. Industry analysts forecast the WLAN integrated circuits market will grow to more than $1 billion in 2006 and will be comprised of an increasing percentage of 802.11a and multi-band products.
Jerry Neal, executive vice president of marketing and strategic development, said, "Our goal is to become the leading provider of WLAN chipsets. We surveyed the WLAN market and did not find a company more complementary to ours than Resonext. The acquisition would bolster our presence in the 802.11b market and increase our total addressable market to include 802.11a and dual-band offerings, as well as a media access controller (MAC). Additionally, we expect the acquisition to accelerate our roadmap to a/b/g multi-band chipsets and provide us with key technologies for the development of emerging multi-mode applications for handsets and other markets. We expect these strengths, when combined with our current competitive advantages in WLAN and our advanced PA capabilities, will enable RFMD to continue to grow share in 802.11b and quickly build a foothold in the 802.11a and multi-band markets."
David Tahmassebi, president and chief executive officer of Resonext, said, "We're excited about the strategic and cultural fits of this transaction. RFMD is a proven supplier in the handset and WLAN markets with world-class design and manufacturing capabilities. We see immediate synergy with RFMD's 802.11b product offerings and their proven expertise in multi-standard power amplifiers. We look forward to expanding our product portfolio and customer base in the near-term, and we believe our unique technology and combined product roadmaps will position RFMD to become the leading provider of WLAN chipsets."
RFMD has agreed to issue $133 million in stock, subject to a collar on RFMD's stock price of between $6.00 and $9.50 per share, for all the outstanding shares of capital stock of Resonext, including the shares issuable upon exercise of outstanding warrants and employee stock options. The number of shares to be issued by RFMD will be determined when the transaction is closed (based on a trailing 20-trading day average price). The minimum number of shares to be issued by RFMD will be 14.0 million (equivalent to $9.50 per share) and the maximum number of shares will be 22.2 million (equivalent to $6 per share). The transaction is subject to the approval of Resonext's shareholders and other closing conditions and is expected to close during RFMD's current fiscal quarter ending December 31, 2002. RFMD anticipates Resonext will have a cash balance of approximately $30 million at the time of the closing, and the transaction is expected to be accretive on a GAAP basis within 12 months of closing. RFMD expects to incur one-time acquisition charges and subsequent amortization expenses related to the transaction, and the Company will detail these expenses upon closing.
RF Micro Devices began volume shipments of 802.11b components in the March 2002 quarter. Since then, the Company has achieved the number two market position in transceivers and has grown WLAN revenues to an annualized run rate exceeding $30 million. RF Micro Devices estimates its WLAN transceivers, which are a primary component of the Company's flexible product offerings, are currently included in greater than 20% of WLAN devices. RF Micro Devices intends to leverage this customer base and flexible business model to accelerate the market acceptance of Resonext's innovative products. Additionally, RFMD plans to utilize the technology and engineering resources acquired to design multi-mode products integrating WLAN and handset functionality. Manufacturers of handheld devices seek lower power consumption and reduced bill-of-material (BOM) costs, both of which are enabled by the higher levels of integration of Resonext's CMOS product offerings.
In addition to innovative products and a growing customer base, Resonext provides RF Micro Devices the systems and software expertise and advanced modeling expertise in RF CMOS technology. Accordingly, Resonext's product line is expected to benefit from RFMD's strategic relationships with suppliers for low cost, high-volume silicon manufacturing. On September 30, 2002, RFMD announced a strategic relationship for silicon manufacturing and development with Jazz Semiconductor. Under the arrangement, RFMD will obtain a guaranteed, lower cost source of supply for wafers fabricated utilizing Jazz Semiconductor's manufacturing processes, including silicon germanium (SiGe), bipolar complementary metal oxide semiconductor (BiCMOS) and RF CMOS.
Resonext employs over 90 people, including 70 engineers - 90% of whom hold advanced degrees. The company has filed 23 advanced wireless technology patents and its flagship product, the RN5200 chipset family, was chosen as the "RF Product of the Month" by the editors of RF Design magazine in January, 2002. The Company has several design wins for the RF5200 chipset and its customers include Taiyo Yuden, a $1.3 billion component manufacturer.
802.11 technology is comprised of multiple standards that operate in different radio frequencies. 802.11b, the most commonly used standard, operates in the 2.4 GHz frequency range and provides for a data rate of up to 11 Mbps. By comparison, 802.11a operates in the 5 GHz frequency range and provides for a maximum data rate of 54 Mbps. A third standard under development, 802.11g, will operate in the 2.4 GHz frequency range and provide for a maximum data rate of 54 Mbps.
Resonext provides highly integrated two-chip CMOS solutions for 5GHz and dual band WLAN platforms. The combination of Resonext's single-chip Zero IF CMOS radio architecture, AccuChannel(TM) technology and flexible MAC software provide Original Equipment Manufacturers (OEMs), Original Development Manufacturers (ODMs), and enterprise and consumer WLAN system providers with decreased bill of material costs, low power consumption, high performance and flexibility. Resonext's flagship product, the Resonext RN5200, is an end-to-end two-chip WLAN turnkey solution with Zero IF implementation. Founded in 1999 by David Tahmassebi and Morteza Saidi, Resonext is headquartered in San Jose, California. The company has secured $68.5 million in funding to date from leading investors, including Bessemer Venture Partners, Norwest Venture Partners, Oak Investment Partners, INVESCO Private Capital and WK Technology Fund.
About RF Micro Devices
RF Micro Devices, Inc., an ISO 9001-certified manufacturer, designs, develops, manufactures and markets proprietary radio frequency integrated circuits (RFICs) primarily for wireless communications products and applications such as cellular and PCS phones, base stations, wireless LANs, and cable television modems. The Company offers a broad array of products - including amplifiers, mixers, modulators/demodulators, and single-chip receivers, transmitters and transceivers - representing a substantial majority of the RFICs required in wireless subscriber equipment. The Company's strategy is to focus on wireless markets by offering a broad range of standard and custom-designed RFICs in order to position itself as a "one-stop" solution for its customers' RFIC needs. RF Micro Devices, Inc. is traded on the Nasdaq National Market under the symbol RFMD.
RF MICRO DEVICES® and RFMD® are trademarks of RFMD, LLC.
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