Entropic Communications to acquire RF Magic

Combined Company Extends Leadership in Connected Home Entertainment

San Diego, CA — Entropic Communications, Inc., the leader in home networking for digital entertainment, announced today that it has signed a definitive agreement to acquire RF Magic, Inc., a leading developer of broadband radio frequency (RF) systems-on-a-chip. Terms of the deal were not disclosed.

The new entity will retain the Entropic Communications name. Patrick Henry, Entropic’s current president and CEO will be the CEO of the merged company. Mark Foley, RF Magic’s current president and CEO will become the president and COO of Entropic Communications once the deal closes.

Synergistic Acquisition – Complementary Product Lines

The merging of the two San Diego-based semiconductor companies brings together established complementary technologies focused on the rapidly growing market for connected home entertainment.

“This merger brings together two independently successful companies in one of the fastest growing segments of the semiconductor market,” stated Patrick Henry, president and CEO of Entropic. “We can now offer customers a comprehensive product portfolio for the connected home entertainment market.”

The combined Entropic brings together complementary technical capabilities and a product portfolio for delivering triple-play services of voice, video and data. The product portfolio will include products in home networking for digital entertainment, satellite channel stacking switches, high-speed broadband access over cable, wireless broadband access and DBS TV tuners, cable TV tuners and terrestrial over-the-air TV tuner products.

“The market for home entertainment – from delivery of rich entertainment services from carriers to the in-home distribution of personal or professional content – is rapidly moving to a new phase where consumers demand flexibility in where and when they consume it,” said Mike Wolf, principal analyst, ABI Research. “The merger of these two companies brings together many pieces of the puzzle being required by systems OEMs, video service providers and entertainment companies to effectively compete in this new environment and well positions the new company to serve their clients.”

Common Vision and Common Market

Entropic and RF Magic are both focused on creating technology solutions to enable connected home digital entertainment. The combined company will have strong relationships with DBS service providers, cable MSOs and telco carriers as well as with many of the leading OEMs in the consumer electronics, communications and home networking market.

“It’s a very natural and ideal fit for both of us. We are both focused on delivering multimedia content into and around the home and have developed two exceptionally talented teams with core competencies not only in chip design but also in systems level design,” stated Henry.

The combined company will have a deeper set of core competencies to leverage for developing next generation products to solve customer problems including: algorithms and protocols capabilities, communication system-on-a-chip design, RFIC design, embedded software, design for manufacturability and quality and reliability engineering.

Scale to Compete

Both Entropic and RF Magic enjoy strong and ramping demand for their products. Entropic has shipped over five million c.LINK chipsets and RF Magic has shipped over twenty million RFIC devices to date.

“This merger comes at a time when both companies have strong revenue growth and have established themselves and their products as leaders in their respective markets.” said Mark Foley, president and CEO of RF Magic. “With our combined domain expertise in satellite, telco and cable operator-based deployments, we are confident that we have the team in place to take advantage of the market opportunities, much more so than if we remained separate entities,”

The combined company will have an increased presence at key foundry partners, back-end assembly and test service suppliers, and CAD tool suppliers which will help drive operational efficiencies.

“The common market focus coupled with their complementary systems expertise positions Entropic to be a major player in the connected entertainment space,” said Steve Rago, IPTV and media networking analyst for iSuppli.