Qualcomm to Acquire Chipmaker Ikanos

Ikanos’ board has recommended the offer to Ikanos stockholders.

QUALCOMM, Inc. (NASDAQ:QCOM) is planning to combine its existing technology that encompasses Wi-Fi Ethernet Switch and small cells with Ikanos DSL modems as well as technologies such as G fast. (IKAN), a high performance broadband networking semiconductor and software provider enabling both central office and home gateway solutions.

“Qualcomm Atheros has always viewed the home gateway as the enabler for consumers to not only access the Internet for browsing and downloading content and video streaming, but also as the hub of the Internet in the home for a variety of reliable and high quality services”, said Rahul Patel, SVP and GM, connectivity at Qualcomm, in a statement.

Under the agreement, Qualcomm Atheros will pay $2.75 per share in cash to acquire all of the issues and outstanding shares of common stock from Ikanos, and will also take on all of the company’s outstanding debt.

“The Ikanos acquisition is consistent with Qualcomm’s ongoing efforts to drive longer-term revenue and profitability growth by extending its smartphone connectivity technologies into strategic emerging growth markets on the periphery of the mobile device”, said Arcuri in a research note.

The purchase will boost Qualcomm’s presence in the home gateway segment of the carrier fixed-line market. As far as software goes, the company represents its chipset with remote diagnosis, management and optimization of the broadband connection, along with voice-over command features.

The move comes as Qualcomm recently reported a almost 50% drop in quarterly profit and is facing pressure from an activist investor. This puts the total cost for the company’s equity at just over United States dollars 47 million, and Qualcomm will also assume the around USD 35 million in liabilities at Ikanos.

Qualcomm said it sees the home gateway as a hub for a range of new internet services.

Reports claim the transaction is expected to conclude before the turn of the year, depending on whether closing conditions are met. Qualcomm Atheros last acquired Wilocity in July 2014, a fabless semiconductor company founded by former Intel employees in 2007.