Tundra To Acquire Systems Solutions Business from Alliance Semiconductor

20th April 2006
ES Admin
Tundra has announced that it has entered into a definitive agreement to acquire the assets of the Systems Solutions Business Unit of Alliance Semiconductor Corporation (“Alliance SSBU”). The acquisition includes intellectual property and several products both in production and under development. Tundra also expects to hire over fifty employees from Alliance SSBU as a result of the acquisition.
“Tundra is a provider of System Interconnect products supporting standards like PCI-X and RapidIO. This acquisition broadens our product offering by adding PCI Express, HyperTransport and PCI bridges. These bridges are designed into systems currently in production at some of the world’s leading communications companies,” said Jim Roche, President and CEO of Tundra. “Moving forward, we will work with our customers to leverage the design expertise and capacity of the acquired business along with our existing technology base to develop a market-leading PCI Express product portfolio.”

“The Alliance SSBU has world-class intellectual property, a history of successful execution and excellent people,” said Mel Keating, President and CEO of Alliance Semiconductor. “Combining this with Tundra’s strong business will benefit both our customers and our employees.”

Under the terms of the agreement, Tundra will pay $5.8 million USD in cash upon closing. The acquisition is targeted to close on May 2, 2006 following the satisfaction of customary closing conditions. On closing, Tundra will assume responsibility for the acquired products and support, which will be available through Tundra’s worldwide sales network.

“This acquisition is positive in many ways,” said Norm Paquette, CFO of Tundra. “It gives us the PCI Express roadmap that our customers have been requesting, which strengthens our position with strategic customers. It also expands and globalizes our R&D team as well as offers attractive financial returns.”

Tundra expects the acquired products to generate revenues of between $1.7 and $2.0 million in the first quarter of fiscal 2007, which starts on May 1, 2006. Thereafter, it is expected that the revenues will grow between 5% and 10% per quarter. For the first few quarters, the acquired business will be effectively break-even and within two to three years, it should generate after-tax profits in line with Tundra’s business model. Since the acquisition closes outside the quarter, Tundra will not be changing its guidance for Q4 fiscal 2006.

“We’ve been executing on an acquisition strategy that has three key elements – strengthening our financial position, broadening our System Interconnect portfolio and increasing our penetration of strategic customers,” commented Roche. “The recent acquisition of Potentia Semiconductor achieves our objectives by strengthening our financial position, allowing us to invest more in our System Interconnect portfolio. The Alliance SSBU acquisition achieves our objectives by broadening our product portfolio and strengthening our position with strategic customers.”

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