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Microtune Buys Chinese Digital TV Chip Firm

Microtune, a supplier of RF silicon for cable and digital TV markets, announced Friday it will acquire privately held Auvitek International, a Chinese manufacturer of digital TV demodulator integrated circuits, for $9 million in cash and stock.

With the acquisition, Microtune said it will move from a "pure-play tuner supplier" to a developer of highly integrated "RF-to-bits solutions."

Auvitek "enriches our portfolio of products; it substantially builds our intellectual property and employee talent base; and it adds resources, alliances and relationships that will help accelerate penetration into the China digital TV market," Microtune president and CEO James Fontaine said in a statement.

The acquisition is expected to close during the month of July. The deal includes a potential earn-out if Auvitek meets certain performance targets, subject to various standard closing conditions.

Under the terms of the agreement, Microtune will pay approximately $6.8 million in cash and 1 million shares of Microtune stock, with a current value of approximately $2.2 million, for Auvitek.

Auvitek's primary engineering operations are based in Shanghai, China. Upon the close of the acquisition, Auvitek president and CEO Pete Birch will become vice president and general manager of the newly formed Microtune Digital Television Business, reporting to executive vice president Barry Koch.

Microtune said it does not expect the acquisition to be accretive in the near term, and it is expected to delay breakeven on a consolidated basis until late 2010. The Plano, Texas-based company reported $108 million in revenue and $6.4 million net profit for 2008.