Conexant Systems will sell its Broadband Media Processing business, which provides chips for cable, satellite and IPTV set-top boxes, to NXP Semiconductors in a deal valued at up to $145 million.
Divesting the set-top unit “represents a major step in our continuing effort to restructure our company’s business model and cost structure,” Conexant CEO Scott Mercer said in a statement. “As we get closer to completing the transaction, we plan to provide additional information on the financial performance we expect from our continuing company.”
Conexant "never really gained a great deal of traction for their products in the set-top business, particularly in cable," In-Stat principal analyst Mike Paxton said. "They haven’t been able to horn in on Broadcom or STMicroelectronics."
The deal also shows that NXP is "becoming a significant supplier for set-tops and consumer electronics in general," Paxton said. (In-Stat, like Multichannel News, is owned by Reed Business Information.)
The Conexant set-top unit’s products include silicon tuners, demodulators, MPEG audio and video decoders, and DOCSIS cable modems.
Under the terms of the agreement, NXP will pay Conexant $110 million in cash and up to $35 million in an “earn-out” fee contingent on the unit meeting certain financial targets over the next two years. The transaction, subject to customary closing conditions and regulatory approvals, is expected to close in the next 60 days.
NXP plans to combine its existing set-top box and digital TV operations with the Conexant operations. "By acquiring Conexant's BMP activities, our digital TV and [set-top box] business will be strengthened in the operator segment of the market and we position ourselves to compete effectively on a global basis,” NXP CEO Frans van Houten said, in a statement.
Conexant’s Broadband Media Processing unit generated $235.3 million in revenue for the year ended Sept. 28, 2007, accounting for 29% of the company’s net revenue.
About 700 Conexant employees in the United States, Northern Ireland, India, Israel and China are expected to join NXP’s Home Business Unit when the transaction closes.
Conexant’s ongoing businesses will comprise two units: Imaging and PC Media, which produces chips for analog modems, PC, audio, video, and digital-imaging applications; and Broadband Access, which provides digital subscriber line (DSL) client-side and central office system-on-a-chip solutions.
Weekly digest of streaming and OTT industry news
Thank you for signing up to Multichannel News. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.