Intel Corp. today announced an agreement to acquire privately held Basis Communications Corp. for $450 million in cash and assumed options. Basis Communications was formed in October 1998 when Cirrus Logic Inc. decided to spin off communications products that were longer considered part of its strategic focus (see Oct. 29, 1998, story).
Intel said the planned acquisition supplements its efforts to become the leading supplier of communications components and software products. Moreover, Basis Communications will immediately expands Intel's network processor line, according to the Santa Clara chip giant.
"The acquisition of Basis allows us to supplement the IX architecture with a network processor specifically designed for customer premise equipment, such as residential gateways and routers built to take advantage of DSL deployment," said Tom Franz, vice president and general manager of Intel's Network Processing Group. "Intelligent systems based on this technology will help enable businesses and homes to take full advantage of new services made possible by high bandwidth connections to the Internet."
Basis Communications, based in nearby Fremont, sells ICs for networking equipment used to direct traffic across the Internet and corporate networks. Basis' Service-Specific Network Processors and related software are targeted at a range of network access systems, such as switches linking local area networks to the Internet and customer premise equipment (CPE) homes or small-to-medium sized offices, said Intel.
Once the acquisition is completed, Intel plans to incorporate Basis' network processor technology into its Internet Exchange (IX) architecture to pursue these communications applications.
Separately, Cirrus Logic in nearby Fremont said it expected to gain $80-to-85 million in cash from Intel's acquisition plans because it holds a minority interest in Basis Communications. Cirrus said the gain is dependent upon Intel and Basis Communications reaching a final agreement.
Intel announced its IX architecture last September, promoting it as a blueprint for building networking and communications equipment, based on programmable chips.
The combination of 16-month-old Basis and Intel's IX architecture "will help create the next generation of Internet equipment," declared Mike Shealy, CEO of Basis Communications.
In addition to network processors, Basis sells semiconductor products for wide area networks (WANs) and serial communications, and PC cards as well as interface controllers for communications equipment. The Fremont company has engineering and business operations in Westford, Mass., Clearwater, Fla., and Shannon, Ireland. When the purchase is completed, Intel said it plans to make Basis a wholly owned subsidiary in its Networking Communications Group.
