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Qualcomm to pay $600 million to buy Flarion

Posted: 12 Aug 2005 ?? ?Print Version ?Bookmark and Share

Keywords:wireless technology? flarion technologies? orthogonal frequency division multiplex access?

Wireless technology company Qualcomm Inc. has said it plans to acquire Flarion Technologies Inc., a developer of Orthogonal Frequency Division Multiplex Access (OFDMA), for $600 million.

Flarion (Bedminster, New Jersey) has developed a technology called FLASH-OFDM, for use with mobile broadband Internet protocol services.

Qualcomm's purchase, net of Flarion's projected cash at the deal's closing, would be in a mix of stock and cash, the company said. Qualcomm may pay an extra $205 million in the form of cash and stick if certain milestones are met over next eight years. The precise details were not disclosed.

"With this acquisition, Qualcomm will be in a stronger position to support advanced development in both CDMA and OFDMA technologies," said Paul Jacobs, chief executive officer of Qualcomm in a statement. "We believe CDMA will provide the most advanced, spectrally efficient wide area wireless networks for the foreseeable future, but with Flarion we can now more effectively support operators who prefer an OFDMA or hybrid OFDM/CDMA track for differentiating their services," he added.

"The acquisition of Flarion establishes Qualcomm as a preeminent developer of emerging OFDMA technologies, enhances our internal OFDMA developments and, when combined with our existing portfolio, results in our owning an industry-leading OFDMA intellectual property portfolio," said Steve Altman, president of Qualcomm, in the same statement.

Upon the closing of the transaction, of the $600 million, Qualcomm estimates that it will issue stock with a value of approximately $267 million, assume existing Flarion options and warrants with a fair value of approximately $128 million, and pay approximately $205 million in cash, net of Flarion's projected cash balance. In addition to the initial $600 million, upon the satisfaction of certain milestones prior to the eighth anniversary of the close of the transaction, Qualcomm is expected to issue approximately $35 million of Qualcomm stock and to pay an additional $170 million of cash.

Additionally, Qualcomm expects one-time charges of approximately $10 million, principally related to in-process research and development, upon closing.

- Peter Clarke

EE Times

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