Ikanos Communications, Inc. (NASDAQ: IKAN), a leading provider of
broadband semiconductor and software products for the digital home,
today announced the signing of a definitive agreement to purchase
the Broadband Access product line from Conexant Systems, Inc.
(NASDAQ: CNXT). The combined organization will have the expertise
and resources required to satisfy the demand for powerful broadband
network products around the world.
Under the terms of the agreement, which was unanimously approved
by the boards of directors of both companies, Ikanos will purchase
Conexant's Broadband Access product line for $54 million in cash
and the assumption of certain employee and facility related
liabilities. In connection with this transaction, Tallwood Venture
Capital, a leading investment firm focused on the semiconductor
industry, has agreed to purchase 24 million shares of Ikanos common
stock for $42 million, or $1.75 per share. Tallwood will also
receive warrants to purchase an additional 7.8 million shares of
common stock at $1.75 per share. The warrants will have a term of
five years. Upon completion of the transactions, Tallwood Venture
Capital will own approximately 45 percent of the outstanding shares
of Ikanos (excluding the warrants). In addition, following the
transaction, George Pavlov, general partner, and Dado Banatao,
managing partner, will join Ikanos' Board of Directors.
Ikanos' purchase of Conexant's Broadband Access product line is
subject to customary closing conditions, including stockholder and
regulatory approvals, and is expected to be completed in the third
quarter of calendar year 2009.
Ikanos expects that the transaction will more than double the
Company's revenue, while providing significant leverage in its cost
and spending structure. Ikanos also expects that the transaction
will be accretive to its non-GAAP earnings per share within the
first year after the close of the transaction.
"With the number of home networks doubling to more than 400
million by 2013 according to analysts, there's a substantial
opportunity for Ikanos to address the need for delivering bandwidth
to and throughout the home," said Michael Gulett, president and CEO
of Ikanos. "We'll use our strengthened leadership in broadband
access as a platform on which to build new offerings that extend
multi-play services seamlessly everywhere they are needed."
Today, Ikanos and Conexant account for a cumulative 330 million
broadband access ports shipped, bringing the power of the Internet
to millions of people around the world. Conexant's Broadband Access
product line has traditionally been strong in North America and
China while Ikanos has led in Japan, Korea and Europe. The combined
company will be well positioned to address the global market for
broadband semiconductors, and better serve customers in all
geographies.
"Customers should not be concerned about product transitions.
Once the acquisition is complete, the combined company will
continue to make available and support the products acquired from
Conexant along with the products of Ikanos," added Gulett.
The combination of Ikanos and Conexant's Broadband Access
product line brings together the industry's most comprehensive
portfolio of broadband access products. Ikanos will build on its
status as the VDSL market share leader, will add substantial ADSL
market share, and will have a broad product portfolio that includes
SHDSL, 802.11 b/g wireless networking, Ethernet switching, and
passive optical networking (PON). In addition, the combined company
will have both MIPS- and ARM-based processors that are powering
broadband access networks around the world.
The combined company will also have the expertise to enable
service providers and network equipment manufacturers to
effectively build advanced networks, and deploy multi-play services
including high-speed Internet, Internet protocol television (IPTV),
voice-over Internet protocol (VoIP) and fixed-mobile convergence
(FMC) offerings. The combined organization's customers will include
a vast array of industry leading network equipment manufacturers
and service providers from around the world.
"The combined company brings together a talented team of
employees that pioneered and set the standards for the broadband
market," said Craig Garen, senior vice president and general
manager of Conexant's Broadband Access business. "Going forward,
we'll continue to innovate and create new broadband access and home
networking products that deliver enhanced value to the
marketplace."
Both Ikanos and Conexant have been strong, active proponents of
industry standards, and are advancing the development of
next-generation technologies like ITU-T G.hn for whole-home
networking, retransmission and the dynamic spectrum management. The
combined company will have a portfolio of intellectual property
that will include well over 400 patents and applications.
"This transaction brings together a powerful combination of
leading products, strong customer relationships, and deep technical
expertise, all dedicated to the broadband market," said George
Pavlov, general partner at Tallwood Venture Capital. "The new
company that emerges will be able to compete more effectively in
existing and emerging markets, develop exciting new products, and
provide greater value for its most important stakeholders -- its
customers, investors and employees."
Conference Call and Webcast for Asset Purchase and First Quarter
FY2009 Financial Results
Management will review the transaction, first quarter 2009
financial results and its expectations for subsequent periods at a
conference call on April 22, 2009 at 5:30 a.m. Pacific Daylight
Time. To listen to the call, please visit
http://www.ikanos.com/investor/webcasts/ and click on the link
provided for the webcast or dial 706-902-1343 and enter pass code
94492869. The webcast will be archived and available through April
30, 2009 at http://www.ikanos.com/investor/webcasts/ or by calling
706-645-9291 and enter pass code 94492869.
About Tallwood Venture Capital
Tallwood Venture Capital, a Silicon Valley venture capital firm,
invests exclusively in semiconductor and semiconductor-related
technologies. The principals of Tallwood have deep, semiconductor
experience that spans all aspects of the semiconductor industry
value chain. By offering broad semiconductor knowledge, direct
operating experience and a high degree of availability, Tallwood
Venture Capital builds close, active working relationships with its
portfolio companies. The company currently has over $500 million
under management. Its portfolio includes Marvell (NASDAQ: MRVL) and
SiRF (NASDAQ: SIRF). For more information, visit
www.tallwoodvc.com.
About Ikanos Communications, Inc.
Ikanos Communications, Inc. (NASDAQ: IKAN) is a leading provider
of advanced broadband semiconductor and software products for the
digital home. The company's multi-mode VDSL2/ADSLx, network
processor and other offerings power access infrastructure and
customer premises equipment for many of the world's leading network
equipment manufacturers and telecommunications service providers.
For more information, visit www.ikanos.com.
� 2009 Ikanos Communications, Inc. All Rights Reserved. Ikanos
Communications, Ikanos, the Ikanos logo, the Bandwidth without
boundaries tagline, Fusiv, Fx, and FxS are among the trademarks or
registered trademarks of Ikanos Communications. All other
trademarks mentioned herein are properties of their respective
holders.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
All statements included or incorporated by reference in this
press release, other than statements or characterizations of
historical fact, are forward-looking statements. Such
forward-looking statements are based on our current expectations,
estimates and projections about our industry and business,
management's beliefs, and certain assumptions, all of which are
subject to change. Forward-looking statements can often be
identified by words such as "anticipates," "expects," "intends,"
"plans," "predicts," "believes," "seeks," "estimates," "may,"
"will," "should," "would," "could," "potential," "continue,"
"ongoing," similar expressions, and variations or negatives of
these words. These forward-looking statements are not guarantees of
future results and are subject to risks, uncertainties and
assumptions that could cause our actual results to differ
materially and adversely from those expressed in any
forward-looking statement. Important factors that may cause such a
difference with respect to the ability of Ikanos to close the
transactions announced in this release, the Company's future
revenues, costs of sales and expenses, net income and earnings per
share, product plans, market size and ability to address demand
include, without limitation the ability of the Company, Conexant
Systems and Tallwood Venture Capital to obtain the necessary
approvals and satisfy all closing conditions for the announced
transactions, as well as the ability of Ikanos, after the
transactions close, to sell its expanded product lines in light of
the current worldwide recession, to reduce and manage total
operating costs of the business while continuing to meet product
delivery commitments to current and prospective customers, to
continue developing products on a schedule that meets customer and
market-window requirements and to properly anticipate the future
semiconductor product requirements for broadband communications to
and through the home. For a further discussion of the risks and
uncertainties, which could cause actual results to differ from
those contained in the forward-looking statements, see the section
entitled "Risk Factors" in Ikanos' Annual Reports on Form 10-K and
its most recent Quarterly Reports on Form 10-Q. Ikanos
Communications cannot assure that the events and circumstances
reflected in any forward-looking statements will be achieved or
occur, nor does Ikanos Communications undertake any obligation to
update any forward-looking statements for any reason after the date
of this press release.
Additional Information About the Transaction and Where to Find
It
Ikanos plans to file with the Securities and Exchange Commission
(the "SEC") and mail to its stockholders a proxy statement in
connection with the proposed issuance of securities to Tallwood and
the acquisition of the Broadband Access product line from Conexant
(the "Transaction"). The proxy statement will contain important
information about the proposed Transaction and related matters.
INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT
CAREFULLY WHEN IT BECOMES AVAILABLE. Investors and stockholders
will be able to obtain free copies of the proxy statement and other
documents filed with the SEC by Ikanos through the web site
maintained by the SEC at www.sec.gov. In addition, investors and
stockholders will be able to obtain free copies of the proxy
statement from Ikanos by contacting Investor Relations by telephone
at (510) 979-0400, or by mail at Ikanos Communications, Investor
Relations, 47669 Fremont Blvd, Fremont, California 94538, USA.
Ikanos and its directors and executive officers may be deemed to
be participants in the solicitation of proxies from the
stockholders of Ikanos in connection with the proposed Transaction.
Information regarding the interests of these directors and
executive officers in the Transaction described herein will be
included in the proxy statement described above. Additional
information regarding these directors and executive officers is
also included in Ikanos' proxy statement for its 2009 Annual
Meeting of Stockholders, which was filed with the SEC on April 14,
2009. This document is available free of charge at the SEC's web
site at www.sec.gov, and from Ikanos by contacting Investor
Relations by telephone at (510) 979-0400, or by mail at Ikanos
Communications, Investor Relations, 47669 Fremont Blvd, Fremont,
California 94538, USA, or by going to Ikanos' Investors page on its
corporate web site at www.ikanos.com.
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Contacts: Bonnie Mott Ikanos Communications 510-438-5360 Email
Contact Margo Westfall Ikanos Communications 510-438-6276 Email
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