Minnetonka, Minn. & Waltham, Mass. - Digi International Inc. and NetSilicon Inc. announced October 30 that they have entered into a definitive merger agreement whereby Digi will acquire NetSilicon in a transaction valued at approximately $50 million.
Minnetonka, Minn. & Waltham, Mass . – Digi International Inc. and NetSilicon Inc. announced October 30 that they have entered into a definitive merger agreement whereby Digi will acquire NetSilicon in a transaction valued at approximately $50 million. The transaction is expected to be accretive to Digi’s earnings in fiscal 2003 and will produce a combined company with approximately $164 million in revenue for the twelve months ended June 30, 2001. The Boards of Directors of both companies have approved the transaction, which is expected to close during the first quarter of calendar 2002.
‘Adding NetSilicon’s embedded Ethernet solutions to Digi’s growing line of Connectware products creates the most competitive family of device connectivity solutions in the industry,’ stated Digi chairman and ceo Joe Dunsmore. ‘The market for network-enabling devices in point-of-sale, industrial automation, and other verticals is in its infancy and, with a strong OEM channel, NetSilicon has established a strategic early-to-market position.’
‘NetSilicon competes by providing a complete solution with hardware, software, and development tools to make integration easy for our customers,’ said Cornelius ‘Pete’ Peterson, chairman and ceo of NetSilicon. ‘Digi understands the applications and product needs of our OEM customers and will help us sharpen our focus on key vertical markets.’
NetSilicon’s core architecture, NET+Works, offers an integrated ‘solution-on-a-chip’ that contains all the development tools, networking software, and hardware needed to deliver Internet/Ethernet connectivity to electronic devices. The NET+ARM family of 32-bit system-on-chip networked microprocessors combines processing capability with Ethernet connectivity in a scalable architecture.
With its embedded Ethernet connectivity solutions, NetSilicon competes in several key vertical market segments: office imaging equipment; factory automation and building control; and point-of-sale devices. In these segments, NetSilicon’s customers include Ricoh, Minolta, Sharp, Schneider Electric, Square D, Hirschmann, Marconi, and NCR.
Under the terms of the definitive merger agreement, each share of NetSilicon stock will be converted into the right to receive either (1) cash, (2) Digi common stock, or (3) a combination of cash and Digi common stock. The exchange ratio is fixed at .6500 of a share of Digi common stock for each share of NetSilicon common stock. Shareholders who do not make an election will receive stock. Shareholders electing to receive cash will receive cash per share of NetSilicon stock equal to the exchange ratio times the average per share closing price of Digi common stock on the Nasdaq National Market System during a defined period ending shortly before the merger. The maximum cash to be paid by Digi is $15 million. If cash elections exceed $15 million, all requests will be prorated among the electing stockholders with the balance paid in stock.
The transaction is subject to approval by shareholders of both companies. Holders of at least two-thirds of the outstanding voting shares of NetSilicon and a majority of the outstanding shares present at Digi’s shareholder meeting must vote in favor of the acquisition. In addition, Sorrento Networks Corp., a significant shareholder of NetSilicon, is not entitled to vote on the transaction and has agreed with Digi to elect to receive the maximum amount of cash to which it is entitled and to be subject to certain selling restrictions on the Digi common stock it receives in the merger.
NetSilicon will operate as a separate legal entity but will be included in Digi International’s consolidated statements of operations. Pete Peterson, NetSilicon’s chairman and ceo, will become a director of Digi International and Bruce Berger, Digi’s vice president of Europe, will assume the responsibility for the NetSilicon operations. Digi will retain NetSilicon’s office in Waltham, Mass.
