Gennum Signs Agreement to Acquire Tundra Semi

March 23, 2009 by Jeff Shepard

Gennum Corp. and Tundra Semiconductor Corp. announced that they have entered into a definitive agreement providing for the acquisition by Gennum of all of the issued and outstanding shares of Tundra, a supplier of system interconnect products and intellectual property (IP) to the world’s leading communications, computing and storage companies. The transaction, which is valued at approximately Cdn$86 million, adds new digital switch and bridge products and functionality to Gennum and builds on Gennum’s growth strategy of extending its high-speed signal integrity expertise and solutions to a broader set of markets.

The transaction is expected to result in a number of benefits for the combined business, including the following: added scale and increased market presence in an expanded, US$1.9 billion total addressable market; a strongly positioned business in signal integrity, bridges and switches using RapidIO®, VME, SDI and HDMI standards, as well as in PCI Express® (PCIe); increased global customer base and stronger existing customer penetration with broadened product portfolio; expanded sales and distribution network in key growth regions such as Asia and China; increased research and development capacity to develop more differentiated new products faster; and expected cash synergies of approximately US$10 million.

The purchase price payable by Gennum for each Tundra common share will be, at the election of the holder, Cdn$4.43 in cash or 1.1575 common shares of Gennum ("Gennum Shares") or a combination thereof, subject to pro ration as discussed below. Based on 19,326,053 Tundra current outstanding common shares, in aggregate, a total of $55 million cash and 8.0 million common shares of Gennum will be issued to holders of Tundra common shares. Based on Gennum’s five day volume weighted average share price on the Toronto Stock Exchange ending on March 18, the total consideration values Tundra at Cdn$4.43 per share, a 48% premium to Tundra’s volume weighted average share price on the Toronto Stock Exchange over the same period.

Over the past 18 months, Gennum has focused on strengthening and broadening its high-speed signal integrity portfolio by adding higher levels of digital functionality and integrating features that allow more complex, high-speed signal transport capabilities. The strategy has been successfully pursued by Gennum in the video broadcast market, where the company’s solutions have been positively received. Gennum believes that by combining the digital expertise, application knowledge and high-speed interconnect products of Tundra with its high-speed signal integrity portfolio and IP, Gennum will accelerate its ability to provide solutions with more integrated functionality to a broader set of markets such as telecommunications, computing and storage.

"Through the acquisition of Tundra, Gennum is positioned to achieve its strategic and financial objectives more quickly and accelerate the development of highly differentiated, high-speed interconnect and signal integrity products," said Dr. Franz Fink, President and Chief Executive Officer of Gennum. "We believe that Tundra’s strong position with leading communications systems OEMs, particularly in the telecommunications market, as well as its global sales network and foundation of talented employees, will increase Gennum’s ability to provide more, high value products to a broader set of markets and will result in increased opportunities for the combined company to grow its business."

Gennum expects that the combined portfolio and capabilities of the Gennum and Tundra offerings will deliver highly differentiated high-speed mixed-signal and interconnect products that capture a greater portion of the silicon content in applications such as wireless, wireline infrastructure, industrial, medical, server and storage equipment. Furthermore, by leveraging Gennum’s advanced high-speed interconnect IP, Gennum believes it can more quickly bring to market new products that support industry-pervasive protocols such as PCI Express, Serial ATA/SAS, USB, DisplayPort, HDMI, 10 Gigabit Ethernet, Fibre Channel, SONET and RapidIO. As data rates extend to 40 Gb/s and 100 Gb/s and beyond, Gennum believes that it is well positioned for the long term, giving customers a compelling roadmap of high-performance solutions with signal integrity, with increased functionality that reduces their overall system cost, improves performance and accelerates their time to market.