Combined Company Expected to Provide Broad Range of USB, PCI, PCI-X,
PCI Express, HyperTransport Interconnect Chips
MOUNTAIN VIEW, Calif., March 8 /PRNewswire/ -- NetChip Technology today
announced a definitive agreement to be acquired by PLX Technology
(Nasdaq: PLXT), a fabless semiconductor supplier of chips based on the
Peripheral Component Interconnect (PCI) standard.
Under the terms of the agreement PLX will issue common stock and options
to purchase common stock with an aggregate value of approximately $20 million,
valued at $9.78 per share, which is subject to adjustment at the closing in
exchange for all outstanding securities of NetChip and options to purchase
securities of NetChip. Additional consideration of common stock of PLX with a
maximum aggregate value of approximately $10 million may be paid out under
certain provisions approximately one year following the close of the
transaction.
In the year ending Dec 31, 2003, NetChip had unaudited revenues in excess
of $9M, including more than $5M in the fourth quarter, with operating profit
greater than $700K and gross profit margins in the 35 percent to 40 percent
range.
Combining PLX and NetChip creates a company that provides a wide selection
of advanced interconnect chips and design support for PCI and USB, which are
two of the leading high speed standards for PCs, servers, consumer
electronics, communications, storage and embedded control equipment.
Furthermore, NetChip's PCI Express solutions currently in development will
expand PLX's PCI Express product offering to address a broader market.
USB 2.0 is a major high speed interconnect standard for connecting PCs and
mobile computers to new generations of external peripherals including
printers, media gateways, external storage devices and other high speed
peripherals. Because of its performance, ubiquity, and ease of use, USB 2.0 is
also used as a high speed interconnect for consumer electronics like, digital
cameras, digital audio players, set top boxes, communications and multi-media
devices. PCI is a system architecture, which is widely used in PCs, servers,
communications, storage, printer, and embedded applications. PCI Express
technology is a next generation interconnect which will provide a performance
upgrade for many USB and PCI applications.
NetChip currently produces a family of USB-to-PCI bridges,
USB-to-general-interface bridges and has PCI Express bridges in development.
NetChip is a leading supplier of chips supporting USB 2.0, the high speed
version of the standard. NetChip's USB 2.0 bridges are among the highest
performing and lowest power USB 2.0 solutions, and are used in a variety of
high performance peripherals including wireless LAN adapters, printers, and
personal video recorders. NetChip sells to over 100 customers including
Conexant, Samung, Hitachi and Xerox.
NetChip has approximately 20 employees, most of whom work in Mountain
View, less than three miles from PLX. NetChip's founder and president, Wei-Ti
Liu, was also a founder of PLX and several of NetChip's key engineering and
marketing people worked for PLX in the past. PLX will offer employment to all
NetChip employees. NetChip's Mountain View employees are expected to move to
PLX's Sunnyvale facility. It is anticipated that, at the time of the closing,
Mr. Liu will transition from president of NetChip to member of the board of
directors of PLX.
PLX currently provides PLX(R) PCI, PCI-X, and HyperTransport interconnect
chips and is playing a leadership role in enabling the adoption of PCI Express
technology. PLX and NetChip's products in production and development are
complementary and nonoverlapping, and many customers need both types of
products in many of their systems. These customers will be able to purchase a
more complete set of interconnect chips and obtain design support from one
familiar source.
NetChip believes that the merger will improve the growth prospects for the
combined company. In addition to a leading product line which offers high
performance and low power products to the USB 2.0 market, NetChip provides PLX
access to new customers and market segments. Furthermore, PLX will gain
NetChip's proven development and marketing team that can expand the technical
capability and market reach of the combined company. NetChip will gain access
to PLX's broad marketing, sales, distribution and technical support channel.
The combined company can also develop and sell products based on the new PCI
Express standard and PLX's leadership in this standard can enhance the success
of NetChip's PCI Express products.
"NetChip's USB leadership provides a new growth dimension for PLX," said
Mike Salameh, president of PLX. "The high-speed version of the standard, USB
2.0 is in a fast-growth mode and NetChip was one of the first suppliers of USB
2.0 silicon. The majority of NetChip's business is USB 2.0 chips used in
wireless and printer applications, and the company is winning designs in
exciting new applications such as digital video recorders and portable media
players. In addition to gaining new markets and customers, we believe PLX can
build on NetChip's success by selling their USB products to our communications
and embedded control customers."
"NetChip has already established leadership in the USB 2.0 market and we
believe combining with PLX can accelerate design wins and revenue growth,"
said Liu. "The merger may also bring operational synergies. Most of NetChip's
investment has been in engineering and now we can take advantage of PLX's
marketing, sales, operations, finance, and engineering infrastructure."
NetChip expects to close the transaction in the second quarter subject to
obtaining the necessary vote of NetChip shareholders and other customary
closing conditions. D. James Guzy, PLX Chairman, is also a director and
approximately 2 percent shareholder of NetChip. Timothy Draper, a director of
PLX, owns approximately 11 percent of NetChip. A committee of the remaining
NetChip board members (none of whom have a personal interest in the
transaction) approved the financial terms and definitive merger agreement.
Exclusive of acquisition-related charges, NetChip expects the acquisition
to be accretive to PLX earnings.
About NetChip Technology, Inc.
NetChip Technology, Inc. is a leading supplier of high-performance
semiconductors and subsystems based on USB, PCI, and other leading edge,
emerging technologies. NetChip was the first to demonstrate and certify a
Hi-Speed USB 2.0 device controller, the first to introduce a PCI to USB 2.0
device bridge, and the first to achieve 40MB/sec sustained USB transfers. You
can find NetChip's products in many popular printers, wireless adapters,
portable media players, personal video recorders, and digital camcorders.
NetChip Technology is headquartered at 335 Pioneer Way, Mountain View, CA
94041, 650-526-1490, http://www.netchip.com
About PLX Technology
PLX Technology, Inc. (http://www.plxtech.com), based in Sunnyvale, Calif., USA,
is the leading supplier of standard I/O interconnect silicon to the
communications, server, storage and embedded-control industries. The PLX
solution provides a competitive edge to our customers through an integrated
combination of high-performance silicon, hardware and software design tools,
and partnerships. These innovative solutions enable our customers to develop
equipment with industry-leading performance, scalability and reliability.
Furthermore, the combination of PLX product features and supporting
infrastructure allow customers to bring their designs to market faster. PLX
PCI, PCI-X and HyperTransport devices are designed into a wide variety of
applications across multiple industries.
SOURCE NetChip Technology, Inc.
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Related links:
http://www.netchip.com
CONTACT:
Adam Chen of NetChip Technology, Inc.,
+1-650-526-1490, ext. 121, adam@netchip.com; or Rafael Torres,
CFO of PLX Technology, +1-408-774-9060, or rtorres@plxtech.com
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