PowerDsine (www.powerdsine.com), the company whose unwritten mission is to turn the RJ-45 interface into a universal receptacle for the transmission of power to networked devices, is being acquired by integrated-circuit and semiconductor manufacturer Microsemi (www.microsemi.com).
The cash-and-stock deal, announced October 24, is valued at $245 million and is expected to close between January and March 2007.
PowerDsine built its first Power over Ethernet (PoE) technology in 1998. Today, the company offers a product portfolio that ranges from silicon to midspan powering devices for PoE applications.
“PowerDsine is a recognized leader in its PoE product offerings for a wide range of rapidly growing applications,” says James Peterson, Microsemi’s president and chief executive officer. “We believe the addition of PowerDsine’s experienced team of analog and mixed-signal design engineers will yield excellent results both in the PoE market and more broadly across a number of important commercial analog and mixed-signal markets we serve today. We are also excited to develop Microsemi’s presence in Israel to leverage the country’s outstanding engineering talent base.”
“We are very pleased to join Microsemi’s team,” adds PowerDsine CEO Igal Rotem. “This business combination will result in a very powerful value proposition to customers, investors, and employees. Microsemi shares PowerDsine’s vision of providing customers with solutions that are designed from a system point of view. This integration will provide the combined resources and capabilities of both companies to further address and fulfill the needs of our customers.”
In a conference call held in late October, Rotem and Peterson explained that PowerDsine had several suitors in the preceding months. “We looked at the company [as a potential acquisition candidate] for over a year,” Peterson said. “And we worked aggressively with PowerDsine’s management for the past six months. There were other companies involved, so it was kind of a competitive environment. PowerDsine is at a lifecycle where they need a larger parent.”
“PowerDsine had several opportunities in this acquisition process,” Rotem added. “One of the most important criteria is the cultural fit between the companies and the team moving forward. Microsemi is a medium-sized company; we will be a division within Microsemi. Our voice will be heard. We will have a much more significant role than if we became part of a multi-billion dollar company.”
“Our intent is to invest in PowerDsine,” Peterson added. “We are excited about the product roadmap PowerDsine has, in Power over Ethernet and next-generation markets we’re going to enter.” He added that the acquired organization’s identity will be Microsemi PowerDsine Group.
Several question-and-answer volleys addressed the subject of midspan versus integrated (or endspan) PoE technology, and one potential customer of integrated systems specifically. “One very positive, unexpected outcome of the September quarter is that midspan came out strong,” Rotem said.
PowerDsine announced its quarterly earnings on the same day as the acquisition. “We’re seeing good, healthy growth in this space as well,” added Rotem. “We expect to continue to invest in midspan and grow this business. The Microsemi deal allows investment in both midspan and integrated.”
When asked about the likelihood that the group will land Cisco as a customer and have its PoE technology integrated into Cisco switches, Peterson responded, “During due diligence, that was a very important part. That particular end customer is convinced the solution from PowerDsine is highly integrated.”
Peterson added, “Cisco, by the way, is very complimentary of PowerDsine joining Microsemi. We [Microsemi] are a supplier to Cisco. Their door is wide open to get a fresh new look at PowerDsine and greeting Microsemi.”
“We have worked very hard to win Cisco,” Rotem noted, adding, “It is not a matter of ‘if,’ but of ‘when.’”
Short runs…
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