TranSwitch (News - Alert) Corporation, announced today that it’s entered an agreement to acquire Centillium Communications, Inc.

 

The acquisition would help TranSwitch, a provider of carrier-class semiconductor solutions for Ethernet over SONET/SDH, Broadband Access and Carrier Ethernet applications, to diversify its product portfolio to include Fiber-to-the-Home and Voice-over-Internet-Protocol solutions, according to the companies.

 

The boards of directors of both companies have unanimously approved the transaction, which is subject to customary closing conditions, including the approval of Centillium’s (News - Alert) shareholders, according to the companies.

 

The transaction is expected to close in the fourth quarter of 2008, according to the companies. Upon completion of the transaction, TranSwitch will have approximately 158 million fully diluted shares outstanding, with current TranSwitch shareholders owning approximately 84 percent and current Centillium shareholders owning approximately 16 percent of the combined company’s shares, company officials say.

 

 “We are delighted to welcome Centillium’s customers, employees and shareholders to join the TranSwitch team”, said Santanu Das, chief executive officer of TranSwitch.

 

Das continued: “Centillium has a large number of important customers including Alcatel-Lucent, OKI, Samsung, ZTE (News - Alert) and Tellabs. Their products have won significant industry recognition, and their Mustang chip is currently being used in OKI’s ONU platform which is part of NTT’s EPON based FTTH deployment. We are particularly excited about Centillium’s second recent design win in the FTTH platform of a second prominent supplier for this deployment. This platform is currently being qualified and we anticipate a ramp in early 2009. The Japanese government has made a major commitment to rolling out FTTH, and NTT’s goal is to reach 20 million homes by 2010. This represents a major revenue opportunity for the company.”

 

Das said that the combination further strengthens TranSwitch’s position in the platforms of Tier-1 equipment suppliers with contracts at carriers that have made significant financial commitments to upgrade their current infrastructures. These contracts include carriers in the United Kingdom, Korea, China, India and now Japan, Das said.

 

Das said that as these deployments begin to ramp in volume, the combined company has the potential to significantly increase its revenue in 2009.

 

“As a larger company, we will enjoy a significantly better expense structure as well as stronger relationships with both customers and suppliers,” Das said.

 

TranSwitch Corporation designs, develops and markets innovative semiconductors that provide core functionality and complete solutions for voice, data and video communications network equipment.

 

As a major supplier to telecom, datacom, cable television and wireless markets, TranSwitch customers include the major OEMs that serve the worldwide public network, the Internet, and corporate Wide Area Networks.

 

“We are very pleased to be joining the TranSwitch team,” said Faraj Aalaei, co-founder and chief executive officer of Centillium, who will also serve on TranSwitch’s board upon closing of the transaction. “Consolidation in the communications industry is both good and necessary, and the combined company will be significantly stronger and more profitable than either one by itself.”

 

“Centillium shares TranSwitch’s culture of strong focus on product innovation, engineering excellence and best-in-class customer support. This is evident in the deep customer relationships both companies enjoy,” Aalaei said.