Transwitch (Nasdaq:TXCC), a provider of high-speed semiconductor solutions for voice, data and video communications, today announced that it had signed an agreement to acquire Mysticom Ltd. for $5 million in shares. Mysticom is a developer of high-performance, low-power, multi-Gigabit Ethernet transceivers for for a variety of applications, such as storage area networks (SAN).
IVC figures indicate that Mysticom has raised approximately $50.5 million to date. The capital market once thought that it would go public at a company value approaching $80 million. The fact that it is being sold for so little is evidence that it failed to make a breakthrough.
The acquisition is a dismal end to what initially seemed to be the great promise of Israel’s semiconductor market.
Transwitch’s share closed yesterday at $1.60, reflecting a market cap of $176.5 million. The company develops and markets processors for niche applications for communications networks. The fact that Transwitch, rather than Broadcom (Nasdaq:BRCM), the market leader for high-speed processors for communications networks, acquired Mysticom suggests that Mysticom was unable to enter this market.
On the positive side, it can be said that Transwitch has considerable experience working with Israeli companies. It closely cooperates with RAD Data Communications, among others. It is not clear what this collaboration has yielded to date, but it is undoubtedly an important strategic partnership.
Mysticom was founded in 1997 by Dr. David Almagor (who headed it for several years), director of engineering Massad Eyal, executive director of technical marketing and product planning Amir Bar-Niv, Israel Greiss, and Eran Lida, most of whom previously worked for National Semiconductor (NYSE:NSM). The company currently has over 60 employees, most of whom are veterans of the semiconductor industry.
According to IVC, Mysticom’s investors including Andy Bechtolsheim (a co-founder of Sun Microsystems (Nasdaq:SUNW)), ABN AMRO Capital, Lehman Brothers European Venture Capital Group, JP Morgan Partner, Koor Corporate Venture Capital, Philips Corporate Venturing, Giza Venture Capital, Pitango Venture Capital, Jerusalem Venture Partners (JVP), Eucalyptus Ventures, Newbury Ventures, Cisco Systems (Nasdaq:CSCO) and Texas Instruments (NYSE: TXN).
Published by Globes [online], Israel business news - www.globes.co.il - on December 6, 2005