Atheros Communications to acquire Intellon

Atheros Communications, Inc. has entered into a definitive agreement to acquire entire stake in Intellon Corporation in a stock and cash transaction. The transaction is valued at approximately $244 million, or $181 million net of Intellon's cash, cash equivalents, and short-term investments as of June 30, 2009.

Atheros Communications is a provider of technologies for wireless and wired communications, while Intellon is a provider of integrated circuits for home networking, networked entertainment, BPL access, Ethernet-over-Coax (EoC), smart grid management, and other commercial applications. Both the companies are based in the US.

Under the terms of the agreement, the overall acquisition consideration consists of an amount of Atheros Communications common stock and equivalents, representing between 45% and 55% of the total consideration with the remainder paid in cash, providing an overall value of $7.30 per share based on the five-day average closing price of Atheros Communications as of September 4, 2009.

As part of the transaction, Intellon shareholders may elect to receive either approximately 0.135 shares of Atheros Communications common stock and approximately $3.60 in cash; or $7.30 in cash; or approximately 0.267 shares of Atheros Communications common stock, for each share of Intellon common stock.

In the aggregate, Atheros Communications expects to issue approximately 4.2 to 5.1 million shares of Atheros Communications common stock and equivalents and pay approximately $115 to $141 million in cash, depending on the overall elections that are made and pursuant to the terms in the definitive agreement.

In connection with this transaction, Intellon shareholders representing approximately 22% of Intellon's outstanding common stock have signed an agreement to vote their shares in favor of this transaction. The transaction is expected to close in the fourth quarter of 2009.

Credit Suisse Securities (USA) LLC is acting as financial advisor and Davis Polk & Wardwell is acting as legal advisor to Atheros Communications. Proskauer Rose LLP is acting as advisor to Intellon Corporation.

Deal Value (US$ Million) 244
Deal Type                Acquisition
Sub-Category             100% Acquisition
Deal Status              Announced: 2009-09-08

Deal Participants

Target (Company)   Intellon Corporation
Acquirer (Company) Atheros Communications, Inc.

Deal Rationale

The acquisition of Intellon is another significant step by Atheros Communications toward its goal of enabling connectivity experiences across the networking, computing, and mobile device markets. The combination of Atheros Communications' wireless large area network (LAN) and Ethernet products with Intellon's powerline communications products, would further allow Atheros Communications to drive the adoption of universal, easy-to-use, networking solutions throughout the digital home. The transaction would further expand Atheros Communications' ability to serve the needs of the digitally-connected consumer, as well as extend its opportunities for growth in new applications and markets, including Ethernet-over-Coax and smart grid solutions.

Related terms: acquisition, advisor, commercial, communications, consumer, entertainment, Ethernet, legal, networking, products, securities, technology, wireless