A split may not occur until 2Q, based on the planned closing date for this acquisition.
Broadcom Corporation to Acquire BlueSteel Networks, Inc., Leading Developer of Network Security Processors
Acquisition Will Enable Network Security Processors Supporting Data Rates from 100 Megabits per second to Over 1 Gigabit per second
IRVINE, Calif. and MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--
Jan. 18, 2000-- Broadcom Corporation (Nasdaq: BRCM), a leading provider of integrated circuits enabling high-speed broadband communications to and throughout the home and business, today announced that it has signed a definitive agreement to acquire BlueSteel Networks, Inc., a Silicon Valley developer of leading-edge Internet security processors.
BlueSteel Networks is a fabless semiconductor company developing and marketing high-performance Internet security processors for e-commerce and VPN (Virtual Private Network) applications. BlueSteel has developed a proprietary, patent-pending architecture for a family of integrated circuits that will perform standards-compliant cryptographic functions at system data rates ranging from 100 Mbps (million bits per second) to over 1 Gbps (billion bits per second).
BlueSteel's technology is key to the development of a secure Internet infrastructure for Voice over Internet Protocol (VoIP), e-commerce transactions, and corporate internetworking and telecommuting. BlueSteel provides silicon-efficient, high-performance single chip solutions that enable equipment vendors to offer wirespeed security without compromising cost, performance or ease of use.
"This is a powerful combination that brings Broadcom's broadband communications expertise together with BlueSteel's leadership in high-speed network security processors," said Dr. Henry T. Nicholas III, President and CEO of Broadcom. "This important acquisition provides Broadcom with a scalable family of security processors and cores with performance up to one 1 Gigabit per second and beyond, to address a variety of VPN products and Broadcom system-on-a-chip devices."
"We're excited about combining forces to address the incredible market opportunity in building a secure Internet infrastructure," said Suresh Krishna, Founder, President and CTO of BlueSteel. "There is a highly synergistic relationship between Broadcom and BlueSteel. The combined team is uniquely positioned to develop innovative, world-class products that benefit our customers by offering silicon-efficient, wire-speed security for a variety of broadband communication applications."
With this acquisition Broadcom is well positioned to take advantage of the relaxed U.S. export restrictions published by the Clinton Administration on January 14, 2000, as the worldwide market for semiconductors performing cryptographic functions will directly benefit from the amended regulations.
BlueSteel's products address a growing demand by communications companies for technology that will help them offer strong broadband security across their product line. As the Internet matures into the medium of choice for commercial transactions, traditional infrastructure equipment including routers, gateways, firewalls, modems, LAN adapters and other Internet appliances, requires robust security as a standard product feature.
Broadcom plans to retain the services of members of BlueSteel's Technical Advisory Board (TAB) which consists of renowned industry experts in the security and cryptography industry who have created many of the algorithms and standards that BlueSteel is implementing in its processors. The TAB includes Dr. Tom Berson, a noted Silicon Valley entrepreneur and Principal Scientist at Xerox PARC; Professor Emeritus Martin Hellman of Stanford University, the co-inventor of public-key cryptography; Dr. Stephen Kent of GTE/BBN, the author of several Internet Engineering Task Force (IETF) standards for Internet Protocol Security and a renowned expert on computer and Internet security; and Paul Kocher, a noted security consultant, co-architect of Secure Socket Layer (SSL) version 3.0 for Netscape, designer of the Data Encryption Standard (DES) search machine "Deep Crack", and developer of many well known security attacks.
Under the terms of the agreement, Broadcom will issue an aggregate of approximately 375,000 shares of its Class B Common Stock in exchange for all outstanding shares of BlueSteel Preferred and Common Stock and upon exercise of BlueSteel employee stock options and other rights. The merger transaction is expected to close within 60 days and will be accounted for as a pooling of interests. The boards of directors of both companies have approved the agreement. The transaction is subject to the approval of BlueSteel shareholders and the satisfaction of regulatory requirements and other customary closing conditions. Broadcom expects to record a one-time charge in its first fiscal quarter to cover related expenses.
Shares of Broadcom's Class B Common Stock are identical to Broadcom Class A Common Stock except for certain voting rights, may be converted into Class A Common Stock at anytime at the holder's option, and are automatically converted into Class A Common Stock upon sale and most other transfers. Broadcom's Class A Common Stock is traded on the Nasdaq National Market(R); the Class B Common Stock is not publicly traded.
About BlueSteel Networks
BlueSteel Networks is a fabless semiconductor firm that develops and markets network security processors. Its mission is to unlock the full potential of broadband Internet communications and electronic commerce by providing transparent, ubiquitous, wire-speed security infrastructure building blocks. The privately held company has offices in Mountain View, Calif. BlueSteel may be contacted at 650/625-0500 or at www.bluesteelnet.com.
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