Semiconductor company Broadcom (Nasdaq: BRCM) is buying Ra'anana-based Percello Ltd., a privately-held company that develops system-on-a-chip solutions for femtocells.
Broadcom will pay about $86 million in cash (net of Percello's cash) for all the shares in Percello. In addition, up to another $12 million in cash will be reserved for future payment to the former holders of Percello capital stock and other rights based on meeting specific performance milestones.
A portion of the cash consideration payable to the stockholders will be placed into escrow to cover indemnity obligations.
The acquisition is Broadcom's sixth in Israel. Broadcom has three development centers in Israel - in Ramat Gan, Yakum, and Airport City.
Broadcom's previous acquisition in Israel was Dune Networks for $178 million.
Femtocells are small, low power cellular base stations that extend coverage indoors where signals are weak. Used primarily in residential and enterprise business settings, femtocells communicate with a service provider's network through a broadband connection, allowing users to continue using their mobile devices without losing connectivity. Percello produces processors for the femtocells. The processors have low power consumption and heat generation.
The acquisition of Percello is expected to enable Broadcom to lower overall bill of material cost and accelerate the time to market for best-in-class and energy-efficient femtocell technology.
Broadcom sees the technology becoming more important as wired and wireless telecommunications continue to converge. Broadband vice president and carrier access line general manager Greg Fischer said, "As wireless data usage continues to expand, this technology is well-positioned to enable wireless carriers to offload both data and voice traffic, while offering subscribers better cell reception in the home and office and accelerating the introduction of new 'converged' mobile broadband services."
Broadcom expects the transaction to close by March 31.
Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2010
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