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Proxim gets Agere out of channel connflict in wireless

Whenever a bunch of American technologists arrive in Europe doing the baby-kissing routine, you can be sure that there's a share hype going on. It's a month since both Proxim and Agere were pressing the flesh of Europe's analysts; and finally, they've revealed what it was about: Agere has sold its end-user business to Proxim.

Agere is one of the two market-leading chip builders in wireless LANs - its main rival is Intersil. And people who used its chips never really liked the fact that Agere also owned one of its biggest customers - Orinoco - dating back to the days when it was all called Lucent.

However, the fact that Agere really wanted to sell Orinoco and end the channel conflict put it in an obviously weak negotiating position; in order to get around that, it spent a month or so talking up its share price. It explained to any journalists or analyst who would listen, what a WLAN was, and why Agere had a dominant share.

In the event, Proxim and Agere ended up in London on the same day. A month or so ago, I found myself listening to Proxim telling me things I already knew about 802.11a (the forthcoming high-speed WLAN standard, not yet fully legal in Europe) and about 802.11b; and then went straight off to the next conference where Agere told me how dominant it was in 802.11b, the current WiFi standard which we all use.

The deal has now been done: Proxim has agreed to acquire the 802.11 wireless local area network (LAN) equipment business of Agere Systems, including its Orinoco (or as they like to spell it, "ORiNOCO") product line, for $65 million in cash. That's just the WLAN business - not the semiconductor part; Agere will continue to supply Proxim with chips for the networking components.

The key phrase is "in cash." The battle of the share prices made it pointless to swap shares.

Both companies look to gain from the deal; Proxim gets a three-year strategic alliance with the major supplier in the business, while Agere gets rid of the channel conflict caused by running with the hare and hunting with the hounds - selling to other WLAN builders while operating a rival outfit of its own.

Standard rent-a-quote from Proxim: “This transaction provides the scale, scope and depth that will allow us to continue our consolidation of the wireless infrastructure business, and to fulfill our vision of integrated wireless connectivity from the core network to devices in a home, office or public space,†said Jonathan Zakin, Proxim Corporation Chairman and Chief Executive Officer. “Upon closing of this transaction, we will provide investors with the broadest wireless pure play in the industry.â€

Equally plausible corporate PR from Agere: “The sale will allow us to strengthen our relationships with key customers and sharpen our strategic focus on our core Wi-Fi chip business,†said Ron Black, executive vice president of Agere's Client Systems Group. “Our Wi-Fi components are fundamental to meeting the growing demand for increased wireless data connectivity. Today's action is a solid step forward in realizing our vision for ubiquitous, wireless broadband access at home, at work, and on the go.â€

Either way, it's the last we'll see of the American VPs of either company in Europe for some months. Until the next acquisition frenzy, of course ...