Tech firm Massana sold in deal worth $26m

 

US technology firm Agere Systems has bought the Dublin-based chip design company Massana in an all-share deal worth $26.2 million (€21.1 million), it said yesterday.

The deal follows a difficult period for the Irish firm, which has struggled to reach break even over the past two years due to the downturn in the chip industry.

Massana's shareholders, which include several big venture capital firms and its three founders, will receive 9.1 million shares in Agere, each worth $2.88 at the time the transaction closed.

Agere valued the deal at $26.2 million, below the almost $35 million in funding that Massana has received since it was founded in 1996 by UCD researchers.

Massana founders Mr Paul Costigan, Mr Brian Murray and Philip Curran will each get less than $1 million from the deal, reflecting the changed times in the global technology sector.

The majority shareholders in Massana - Dresdner Kleinwort Capital, Jafco, Act Venture Capital, BancBoston Capital and Vision Capital - will net most of the shares. But this will not cover the cost of funding Massana.

Mr Murray said yesterday that Massana had raised almost $35 million during its life and was sold for $26 million. "The investors had to make their money back," he said. "But we see this as an opportunity going forward."

Massana is a fabless semiconductor firm, which develops the technology to power broadband data networks for corporations. These so-called gigabit Ethernet networks typically run at speeds of more than a billion bits per second, many times faster than typical broadband networks.

Agere, which also develops communication chips, said the acquisition of Massana would enable it to address the emerging market for these types of chips.

The US firm said that it would hire all 45 employees at Massana and it may expand the operations depending on demand.

Mr Costigan, Massana's chief executive, will not join Agere but Mr Curran and Mr Murray will join the company.

Mr Murray said the Massana founders had decided to sell the firm because of the huge expense of commercialising its cutting-edge technology.

The transaction, which was arranged by Irish corporate finance house Ion Equity and US boutique corporate financier Alliant Partners, follows a difficult nine months for Massana and its employees. Last year Massana issued convertible secured loan notes to raise $7.5 million to keep it afloat while it sought a new investor or buyer. The latest financial accounts for the Massana Group show it suffered heavy losses during the most severe downturn in the history of the chip sector.

Massana Design, one of the subsidiary firms within the Massana group, lost $12.7 million in 2001 and had net liabilities of almost $20 million at December 31st, 2001. Massana Limited, the holding company of the group, lost $339,999 last year and is owed $17 million from its subsidiaries, its accounts show.

Earlier this year, Dublin software firm Eware was sold to ACCPAC International and Eurologic was sold to Adaptec. Baltimore Technologies has also sold off several divisions.