CUPERTINO, Calif.-DSP Communications Inc. and Proxim Inc. announced they mutually have agreed to terminate their planned merger. The companies reported declines in the share prices of each company’s stock after a merger was announced, prompted DSPC and Proxim to discontinue their plans.
The companies said they will, however, pursue a partnership for joint product development and marketing.
The merger was announced Oct. 29. DSPC’s stock dropped 49 percent that day to close at $35.25 on the Nasdaq stock exchange, and Proxim’s increased 15 percent to $21.50.
On Nov. 22 the merger was publicly called off. DSPC’s stock closed at $38, that day-no change from the day before-and $40.75 last Monday. Proxim’s stock closed Nov. 22 at $19.75-also no change from the day before-and $19.63 on Monday.
DSPC’s costs related to the merger are an estimated $5 million, of which $3.5 million will be paid to Proxim. These costs will be recorded as general and administrative expenses during the current quarter.
Proxim, which is headquartered in Mountain View, Calif., is an original equipment manufacturer, or OEM, supplier for spread spectrum wireless data networking products. DSPC develops chipsets, integrated circuits and software based on digital signal processing for a variety of cellular and personal communications services applications, said the company.
The merger was intended as a tax-free stock exchange-valued by DSPC at $400 million-and a pooling of interests for accounting and financial reporting Purposes.
