CAMARILLO, Calif. -- Vitesse Semiconductor Corporation (Pink Sheets:VTSS) today announced a definitive agreement to sell a portion of its storage products business to Maxim Integrated Products, Inc. (NASDAQ:MXIM) for $63 million in cash and potential earn-out payments of up to $12 million in the aggregate. Vitesse also announced $30 million in new financing, which the Company will use, along with the sale proceeds, to repay its existing credit facility and to invest in its business.
As a result of these transactions, Vitesse is better focused on its core Networking and Ethernet markets where we have strong competitive advantages and can be a leader. Further, we are now positioned with the right capital base to build a sustainable business model and invest in our future growth, said Christopher R. Gardner, chief executive officer of Vitesse.
Vitesse Will Focus on Networking and Ethernet IC Portfolios Following Sale
Maxim will acquire Vitesses Serial Attached SCSI (SAS), Serial Attached ATA (SATA) expander product segments, enclosure and baseboard management devices and certain other assets of Vitesses Storage Products Division. The products being divested accounted for approximately $20 million of Vitesses consumption during the 12 months ended June 30, 2007.
Under the terms of the agreement, Vitesse will receive a cash payment at closing in the amount of $63 million. Additionally, Vitesse may receive cash earn-out payments of up to $12 million upon achieving certain commercial milestones over the period of Vitesses fiscal year 2008. The transaction is expected to close in the fourth calendar quarter of 2007 following the satisfaction of regulatory requirements and other customary closing conditions.