An Irish computer chip design firm has been acquired by US company, PMC-Sierra for $25.8 million (€24 million), The Irish Times has learned.
Toucan Technology, which specialises in telecommunications and digital signal processing (DSP) semiconductor design, and employs 30 people in Galway, will now take up 150,000 PMCSierra shares which were trading yesterday at $172.
The acquisition nets $11.1 million for Toucan co-founders, Mr Pat Sheehan and Mr Bryan Campbell, who between them hold a 43 per cent stake in Toucan.
The rest of the Toucan staff will receive PMC-Sierra shares to the value of $2.8 million for their 11 per cent holding in the company.
The remaining beneficiaries from the deal include venture capital company, Delta Partners, which stands to gain $6.9 million for its 27 per cent shareholding purchased two years ago for £1.3 million.
Enterprise Ireland and a private investor are each in line for $1.5 million for its 6 per cent stakes, while the remaining 7 per cent was already owned by PMC-Sierra when it became a strategic partner of Toucan last year.
According to Mr Sheehan, Toucan chief executive, the approach to purchase the company came from PMC-Sierra sooner than expected.
"We didn't expect a development like this for another couple 0iof years. But we had an ambitious growth plan in place where we were going to start devoting other resources to other clients and PMC-Sierra decided they wanted our services exclusively."
In particular PMC-Sierra is understood to have been attracted to intellectual property Toucan had developed in the area of communications networking technology, specifically digital subscriber line (DSL) technology. The result facilitates a greater throughput of digital information over traditional telephone lines.
Since it was founded more than six years ago, Toucan has operated as an independent design house specialising in the research and development of next generation chips for broadband technologies.
Two years ago it decided to focus almost exclusively on integrated circuit design, but laterally about 30 per cent of Toucan resources were devoted to PMCSierra projects. PMC-Sierra has a number of blue chip customers in the telecommunications industry, including Alcatel, Cisco, Ericsson, Lucent and Nortel.
The two companies have signed an agreement subject to completion, which will be accounted as a pooling of interests. Mr Sheehan says Toucan will now operate as PMC-Sierra Ireland. The management will continue to operate the business as an integrated circuit design house, but reporting directly to the corporate engineering arm of PMC-Sierra.
Toucan is in the process of setting up a design centre in Dublin, with offices recently leased in Blackrock. Mr Sheehan says the deal means the company can aggressively expand in Galway and Dublin to around 100 employees within the next two to three years.
"We believe we've achieved excellent shareholder value, and a very good fit with PMC-Sierra. The acquisition is a mark of the talented staff we've assembled here, and any deal needed to offer a good cultural fit," Mr Sheehan says.
