Digi International acquires wireless company, MaxStream

08/03/2006


Minnetonka, MNDigi International Inc. acquired MaxStream Inc., described as a “fast-growing, privately held corporation and a leader in the wireless device networking market.” The acquisition is a merger transaction for $38.5 million of cash and stock, with $19.25 million paid in cash and $19.25 million in Digi stock. The companies made the announcement July 27.

Based in Lindon, UT, and employing 49 people, MaxStream generated $10.4 million in revenue and $1.3 million in net income, or 12.7% of revenue, in the year ending Dec. 31, 2005, the companies reported. MaxStream supplies device manufacturers and system integrators with reliable wireless modules and box products said to be easy-to-use and allow customers to wirelessly monitor and control electronic devices. Distance and speed options range from 100 ft to 40 miles and a few kbps to 1.5 Mbps. Applications include automated utility meter reading, oil and gas monitoring, remote control and monitoring of commercial heating and air conditioning systems, vehicle information access for fleet management, industrial controls, wireless sensors, and electronic signals.

'Our product lines are entirely complementary,' said Joe Dunsmore, Digi chairman, president and CEO. “We're both focused on the commercial-grade device networking market and our core strategies of providing turnkey box products and embedded modules are the same.'

Digi is focused on connecting commercial and industrial devices via embedded and boxed/packaged products. Adding to serial, USB, Ethernet, Digi has moved into wireless in the past four years with products and capabilities in WiFi (802.11) and cellular technologies. Digi calls MaxStream a leader in the ZigBee/802.15.4 market, targeted at very low power, low bandwidth solutions for applications such as wireless sensor networks.

Pursuant to the terms of the merger agreement, MaxStream became a wholly owned subsidiary of Digi. The cash and stock purchase price was used to purchase all of the outstanding shares of MaxStream stock and to buy out all outstanding MaxStream stock options. Digi will retain the MaxStream office in Lindon. Digi expects MaxStream to contribute in excess of $2.5 million in revenue for the fourth fiscal quarter of 2006. Digi anticipates MaxStream will contribute revenue in a range of $20 million to $24 million for fiscal year 2007, the companies say. Digi expects MaxStream's gross margin to be in the 53-57% range for fiscal 2007.

—Edited by Mark T. Hoske , Control Engineering editor in chief





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