Tundra Semiconductor Acquires Silicon Logic Engineering
Tundra Semiconductor Corporation (TSX:TUN), the leader in System Interconnect, today announced that it has acquired Silicon Logic Engineering, Inc. ("SLE") of Eau Claire, Wisconsin for $14 million USD.
Ottawa, Ontario - June 1, 2006 -- Tundra Semiconductor Corporation (TSX:TUN), the leader in System Interconnect, today announced that it has acquired Silicon Logic Engineering, Inc. ("SLE") of Eau Claire, Wisconsin for $14 million USD. SLE is a leader in developing high-performance communications and computer chip products for some of the world's largest networking and computing customers. The addition of SLE's highly advanced resources, expertise and intellectual property (IP) will strengthen Tundra's leadership in System Interconnect for the communications and computing markets.
Under the terms of the agreement, the purchase price is $14 million USD comprised of $10 million USD cash and $4.0 million USD (approximately 259,000) common shares of Tundra. Half of the share consideration will be payable over the next two years depending on certain operational objectives.
"SLE is clearly a company of unique talent and technical depth and we are delighted to welcome them to the Tundra team. This acquisition fulfills a key element of our strategy: by combining SLE's skills with our existing IP and customer relationships we will expand our product portfolio and broaden the range of applications we can address. Our customers will benefit because we will offer more value through our products and services", said Jim Roche, President and CEO of Tundra. "This also complements our recent acquisition of Alliance SSBU by adding deep engineering knowledge of computer and communications systems to help us develop a stronger portfolio of PCI Express products."
Founded in 1996 and with roots in the supercomputer industry, SLE is a private company with over forty employees, each with an average of over 15 years of world-class design experience. The company has a successful track record in all aspects of high-performance chip and system design. Since its inception, SLE has delivered over 35 first-time-right designs.
"We are pleased to be joining forces with Tundra. Their leadership in delivering world-class standards-based System Interconnect products combined with SLE's excellent track record of delivering high-performance chips creates a formidable offering well positioned to respond to the growing System Interconnect outsourcing trend, " said Jeff West, President of Silicon Logic Engineering. "Also, the strong alignment of the companies' cultures will generate a natural synergy. This is a big win for customers and employees."
Jeff West is now Vice President of Design Services at Tundra reporting to Jim Roche. Mr. West and all other SLE employees will remain at the Eau Claire facility and SLE will continue to serve its existing and growing customer base.
In addition to the complementary skill and experience of the SLE team, Tundra gains valuable IP as a result of the acquisition. SLE is the world's leading provider of SPI 4.2 cores. SPI 4.2 is a high-speed System Interconnect standard used by networking and communications companies.
Tundra expects the acquisition to generate revenues through design services and IP licensing. The SLE business is expected to generate revenues in the range of $2.0 to $2.3 million per quarter, with gross margins of between 35% and 40% and profit after tax of between 10% and 12% of revenues.
"Our recent acquisitions demonstrate we are executing against our strategy. Our objective is to strengthen our financial position, broaden our System Interconnect portfolio and increase our penetration of strategic customers. The Potentia Semiconductor acquisition achieves our objectives by strengthening our financial position. The Alliance SSBU acquisition achieves all three objectives by giving us a growing and increasingly profitable revenue stream; products and IP that support PCI Express, PCI and HyperTransport System Interconnect standards; and increased revenue at key strategic customers. The SLE acquisition complements our previous acquisitions by broadening our offering now and in the future and increasing our penetration of several key strategic customers," commented Roche.
Conference Call And Webcast
The Company will be holding a conference call today, June 1, 2006 at 8:30AM EST to review the aforementioned transaction. Investors may access the conference call via any of the following:
Replay: 416-640-1917, Pass code: 21190997#. (Available up until June 9, 2006)
Access the Web Cast
Tundra Semiconductor Corporation (TSX:TUN) is the global leader in System Interconnect providing world-class support and leading edge semiconductor solutions to the world's foremost communications, networking, storage system, and information technology vendors. Consistently delivering on system level performance promises that reduce time to market, Tundra System Interconnect ensures market advantage in wireless infrastructure, storage networking, network access, military, industrial automation, and information technology applications. For more information, please visit www.tundra.com.
Comment respecting any Forward Looking Statement in this release -
Tundra Semiconductor Corporation is a public company with common shares listed for trading on the Toronto Stock Exchange (TSX:TUN) in Canada. All figures, unless otherwise noted, are stated in Canadian dollars in accordance with accounting principles generally accepted in Canada.
The Company cautions that the forward-looking information in this release is based on certain assumptions made by the Company that may prove to be inaccurate. Assumptions made include customer demand for the acquired design services and IP licensing business, the Company's ability to maintain and enhance existing customer relationships of the acquired business, as well as the Company's ability to market its design services to new and existing customers. Furthermore, the Company cautions that the forward-looking statements in this release are based on current expectations that are subject to risks and uncertainties. Actual results may differ due to factors such as the Company's ability to integrate the acquired business, customer demand for the acquired design services, changes in customer relationships, new product and services development, competitive products, pricing pressure, and changes in the embedded systems market specifically. Additional information identifying risks and uncertainties is contained in the Company's filings with the various provincial securities commissions.