Entropic Buys Vativ

Entropic Communications Inc. has acquired the assets of Vativ Technologies, a San Diego-based fabless maker of advanced digital signal processing solutions. The deal is valued at $5.9 million in cash, with Entropic hiring 17 Vativ employees. Vativ had raised $37 million in VC funding since 2001, from firms like Forrest Binkley & Brown, InnoCal Venture Capital, Intel Capital, Mission Ventures and Redpoint Ventures.

PRESS RELEASE

Entropic Communications Inc. (ENTR), a provider of silicon solutions to enable connected home entertainment, has acquired the assets of Vativ Technologies Inc., a fabless semiconductor company specializing in high-bandwidth, advanced digital signal processing solutions, for $5.9 million.

The Vativ (San Diego) acquisition is related with Entropic's focus on connected home entertainment. Vativ has developed solutions for HD and digital TV applications. It has a solid intellectual property (IP) portfolio and a High Definition Multimedia Interface (HDMI) product family.

In addition, Vativ has developed a digital signal processing (DSP) adaptive equalization capability. This building block technology can be applied across a broad range of products and markets, including the digital TV market.

''The Vativ Technologies acquisition brings Entropic a highly experienced and innovative team with core competencies in physical layer, digital signal processing, communication systems and mixed signal, filling some key roles in our hiring plan and enhancing our intellectual property portfolio,'' said Patrick Henry, chairman and CEO of Entropic Communications (San Diego), in a statement.

Under the plan, Entropic has hired 17 employees from Vativ, including 15 engineers. The acquisition price of approximately $5.9 million was paid in cash with a portion held back in an escrow fund to satisfy potential indemnification claims. In addition, Entropic will assume approximately $1 million of liabilities.

Entropic may record a one-time charge for purchased in-process research and development expenses. The amount of that charge, if any, has not been determined. Excluding one-time charges, Entropic expects the acquisition will be neutral to earnings in the near term and accretive within two quarters based on expected revenue growth.