Intel to buy Ziatech

August 14, 2000: 2:45 p.m. ET

Chip giant's latest deal is its ninth communications buy this year

NEW YORK (CNNfn) - Aiming to increase its presence in the fast-growing communications infrastructure market, Intel Corp. on Monday said it would pay roughly $240 million in cash for Ziatech Corp.

Ziatech, a privately held company based in San Luis Obispo, Calif., makes circuit boards, hardware platforms and development systems based in Intel's semiconductor architecture.

The 24-year-old firm lists communications outfits, such as Ericsson (ERICY: Research, Estimates), Copper Mountain Networks (CMTN: Research, Estimates), Nortel Networks (NT: Research, Estimates), Lucent Technologies (LU: Research, Estimates) and Redback Networks (RBAK: Research, Estimates), among its customers.

The deal marks the latest acquisition Intel (INTC: Research, Estimates) has made in the communications area this year as it seeks to extend its reach into that rapidly growing market. Of the 10 companies the chip giant has taken into its fold this year, including Ziatech, nine have been in the networking and communications area.

Earlier this month, Intel agreed to buy Trillium Digital Systems Inc., which develops software used in communications systems for roughly $300 million. In April, Intel acquired Picazo Communications Inc., a privately held computer telephony solutions provider, for an undisclosed amount.

In March, Intel bought Basis Communications Corp., which makes chips used to help route traffic across corporate networks and the Internet, for roughly $450 million. Intel in March also purchased Giga A/S, a Denmark-based maker of optical communications chips, for $1.25 billion.

Other Intel acquisitions in the communications sector this year include Ambient Technologies Inc. and Thinkit Technologies Inc.

"Our customers require advanced components to build extremely reliable and fast networking and communications gear," said John Miner, vice president and general manager, Intel's communications products group, which was established last July.

"Intel will help telecommunication providers meet their customers' rigorous networking requirements by incorporating Ziatech's lineup of Intel Architecture-based computing building blocks into our current portfolio of communications products," Miner added.

After the Ziatech transaction is completed, which an Intel spokesman said should be before the end of the year, the company will become a wholly owned subsidiary of Intel. Ziatech's 200 employees will become part of Intel's communications products group.

In afternoon Nasdaq trading, Intel shares were up 1-9/16, or 2.5 percent, at 65-3/8.