PLX buys Teranetics for $36 mn

SAN JOSE: A merger agreement has been inked between PLX Technology, Inc., a designer of PCI bridge and switch chips, and Teranetics, Inc., a developer of physical layer chips for 10 Gbit/second Ethernet over copper.

According to the agreement, PLX will acquire Teranetics in exchange for 7.4 million shares of PLX- which are valued at approximately $27.6 million; cash of approximately $1.3 million and also two promissory notes totaling about $6.9 million. PLX will also take on approximately $18 million of Teranetics’ debt and expenses, said an EETimes report.

The deal is expected to be completed in early October, and the board of directors of both companies has already approved the deal. Analysts say that this is a positive deal for both parties involved — PLX needed the technology to enable its expansion beyond its core PCI chip business, and Tetranbics needed this investment in order to become profitable.

Startups in the field of 10Gbit/s Ethernet over copper has been slow to ramp and have been feeling pressure from investors. Insiders say that the demand for the so-called 10GBase-T devices Is not likely to grow to significant volumes until the second half of 2012. By that time many of the startups may need more finances to stay on their process road maps," he said.

PLX is now working under a relatively new chief executive and has enjoyed revenues that have soared in recent years to about $80 million. With this merger acquisition, the company gets access to the leading edge serdes technology in the 10GBase-T devices, something it can apply to a broad range of interconnect markets.