Acquisition expands WLAN portfolio

Atheros Communications has signed a definitive agreement to acquire Zydas Technology Corporation, a privately held Taiwan-based fabless IC design company.

Atheros Communications has signed a definitive agreement to acquire Zydas Technology Corporation, a privately held Taiwan-based fabless IC design company specialising in high-performance IEEE802.11 wireless LAN (WLAN) semiconductor and software solutions for PC, mobile and embedded applications.

Zydas is headquartered in Taiwan's Hsinchu Science Park, one of the world's most active areas for semiconductor design and manufacturing.

Through the acquisition, Atheros will significantly enhance its engineering capabilities and expand its technical staff.

Zydas has over 70 employees who will join Atheros, approximately 75% of whom are involved in research and development (R and D).

The R and D leaders each possess more than 15 years of experience in DSP algorithm, IC design, channel characterisation, communication protocols and real-time operating systems.

Zydas will become Atheros' new Taiwan Research and Development Centre.

"Zydas is a proven wireless technology leader with its widely adopted and cost-effective 802.11g and 802.11a/g USB designs", said Craig Barratt, President and Chief Executive Officer of Atheros.

"Zydas' accomplished technical design team and innovative solutions make them a strong complement to Atheros".

"This acquisition will enhance our world-class engineering team and provide an additional R and D centre to support Atheros' ongoing global expansion into new wireless markets".

Zydas' WLAN USB adapter solutions fit seamlessly into Atheros' product range and well-established sales channels.

Not only will Atheros apply Zydas' technology to the existing 802.11g and 802.11a/g WLAN markets, but it will also leverage Zydas' engineering capabilities to bring to market higher performance 802.11n WLAN USB adapters.

Atheros now offers its customers the industry's most complete portfolio of WLAN solutions - for home networking, PC connectivity, enterprise access, consumer electronics and mobile/handheld markets.

"Atheros' technical leadership in the wireless industry combined with its expansive customer base is ideal for developing and leveraging Zydas' USB expertise", said Wayne Hwang, Chief Executive Officer of Zydas.

Small form factors and easy, reliable setup make WLAN USB adapters the preferred method for quickly connecting a home PC to a wireless access point/router or home gateway.

According to IDC, in 2005 the market for WLAN USB solutions was 9.4 million units growing with a CAGR of 148% between 2002 and 2005.

The acquisition of Zydas will enable Atheros to further serve this WLAN market segment with end-to-end solutions for clients, access point/routers and gateways.

The cash and stock transaction, currently valued at approximately $23 million, may include an additional consideration to shareholders if certain defined milestones are achieved.

The transaction is expected to close during Atheros' second fiscal quarter ending 30th June 2006, and remains subject to fulfilling regulatory requirements and other customary closing conditions.

Atheros may record a one-time charge for purchased in-process research and development expenses.

The amount of that charge, if any, has not yet been determined.

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