Motorola acquires Blue Wave for up to $165M
Blue Wave brings important capabilities and technologies which, when combined with those of Motorola's Computer Group (MCG), will enable the delivery of a more robust integrated platform for telecommunications OEM customers building applications such as media and access gateways, representing a significant time-to-market enhancement for those customers.
Motorola will exchange approximately 6.5 million common shares for the fully diluted common shares of Blue Wave, which is expected to have a total value between $135 million and $165 million. Each Blue Wave share will be exchanged for .3947 shares of Motorola common stock, provided that the average closing price for a share of Motorola common stock is less than or equal to $25.38 based on a twenty trading day average. If the average Motorola price per share is greater than $25.38, then the exchange ratio will be determined by dividing $10.02 by the average Motorola price per share as described above. If the average Motorola price per share is less than $20.77, then Blue Wave may exit the transaction without penalty unless Motorola agrees to issue additional shares to increase the transaction value to $135 million. Motorola also intends to roll over existing employee stock options into Motorola options based on the final exchange ratio. The merger, which was approved by the boards of both companies, is intended to be a tax-free reorganization. The acquisition will be accounted for as a purchase and is expected to be completed in the second quarter of 2001.
Blue Wave Systems, best known for its ComStruct(TM) software environment that speeds up digital signal processing (DSP) application development by as much as five-fold when compared to traditional methods, will continue its operations in Carrollton, Texas and in Loughborough, England.
The company will become part of the telecommunications business of Motorola Computer Group, which provides embedded equipment for the world's top telecommunications OEMs running wireless, enterprise, networking and transmission applications.
"Motorola Computer Group had a great year and with our acquisition of Blue Wave Systems, we expect to do even better in 2001," said Wayne Sennett, senior vice president and general manager, Motorola Computer Group. "We've been looking to quickly build our team and technologies to keep up with changes in the telecom industry. Acquiring Blue Wave Systems is a good start and we are confident that customers will see a positive impact from this collaboration. Motorola will also continue to explore ways to provide the necessary components to build high-availability telecommunications infrastructures. Our plan is to lead this market space as we become an invaluable resource to telecom OEMs around the world."
Commenting on this announcement, Rob Shaddock, president and chief executive officer of Blue Wave Systems, said, "The ComStruct product range that we launched in 1999 is designed to be integrated with other products. This acquisition is a natural step forward from the strong relationship we have already established with Motorola Computer Group through our partnership programs. We serve many of the same telecommunications OEM customers and they have been asking for our ComStruct products in Motorola Computer Group's industry-leading, high-availability platforms. By combining forces, we are ensuring that we are at the forefront of delivering integrated solutions to our telecom customers and able to give those customers an even greater time-to-market advantage. At the same time, Motorola Computer Group's worldwide sales and support network will enable us to deliver higher levels of service and reach more customers."
John Hughes, vice president and director of the Motorola Computer Group telecommunications business, said, "This acquisition is another step in our telecommunications strategy to offer more complete solutions to our OEM customers, allowing them to focus on adding their unique applications and getting products to market in as little time as possible."
"With the telecommunications industry moving to packet architectures, signal processing is at the heart of the emerging 2.5G and 3G wireless networks that our customers are currently building. DSPs are crucial in the efforts to integrate traditional voice, wireline and wireless networks with the Internet. Acquiring Blue Wave Systems will give Motorola Computer Group additional key components for our standard telecom platforms, which in turn will help us deliver highly integrated platforms that help give our customers the time-to-market advantage they're looking for."
Blue Wave Systems introduced the ComStruct line of high-performance DSP resource boards and Framework Architecture for Communication Technologies (FACT(TM)) software to meet the growing need for DSP functionality and versatility in telecommunications and data networks. Specialized DSP microprocessors are widely used for translating analog and digital signals and to handle media compression. The FACT package enables OEMs to manage ComStruct DSP resource boards through an application level interface instead of coding directly for the DSP. This streamlined software development methodology can shrink development cycles to as little as one-fifth of the time that it would take to work directly with the DSPs.
In connection with the execution of the merger agreement, Motorola entered into a voting agreement with certain stockholders of Blue Wave Systems who collectively beneficially own approximately 7.96% of the Blue Wave Systems common shares, pursuant to which those stockholders agreed, among other things, to vote their shares in favor of the transaction at a special meeting of the Blue Wave Systems' stockholders to be called to vote upon the transaction. In addition, Blue Wave Systems has agreed to issue to Motorola a stock option exercisable under certain circumstances for newly issued shares equal to 19.9% of Blue Wave Systems' currently outstanding common shares.
The transaction, which is subject to regulatory approvals and approval of Blue Wave's stockholders, is expected to be completed during the second quarter of 2001.
Source: Motorola