Agere Systems Acquires Massana Ltd.

ALLENTOWN, Pa., August 25 -- Agere Systems announced today it has acquired Massana Ltd., a Dublin, Ireland-based developer of Gigabit Ethernet-over-copper physical layer device (PHY) technologies.

Agere acquired the company for approximately 9.1 million shares of Agere Class A common stock, valued at about $26.2 million, based on the closing price of $2.88 for the Agere Class A common stock on August 22. About 45 Massana employees will join Agere, the company said.

Agere said it expects to quickly deliver Gigabit Ethernet chips to address the transition of enterprise networks from fast Ethernet to Gigabit Ethernet speeds. Enterprise networks typically run at speeds of 10/100 mb/s over the current installed base, which consists mostly of copper networks. Gigabit Ethernet-over-copper PHY technology can deliver 10 times that speed to businesses over the same copper networks. Agere said it will supply Gigabit Ethernet PHYs to Ethernet switch providers as well as PC and server OEMs as they migrate their products to Gigabit Ethernet.

"We believe the transition to Gigabit Ethernet represents a major opportunity for Agere," said Sohail Khan, executive vice president of Agere's Infrastructure Systems Group. "Our customers need Gigabit Ethernet-over-copper technology to cost-effectively deliver faster speeds to the desktop, to the server and in the wiring closet. The acquisition of Massana, which is one of the few companies in the world with a working GbE PHY, will allow us to address the emerging GbE market quickly, with the right feature set at the right price."

Agere, which already offers custom solutions for Ethernet applications, said it will use Massana's PHY technology to deliver a variety of Gigabit Ethernet products, from single to octal ports into network interface cards and LAN-on-motherboard devices for computers and servers, as well as Ethernet switches. With the acquisition, the company said, Agere plans to deliver a next-generation 0.13 micron single PHY product in early 2004 and an octal in mid-2004.

Massana's PHY device has been tested and validated by the University of New Hampshire.

"In an effort to complete the rollout of 1000 Base-T compliance tests, we are pleased to have partnered with Massana to develop additional physical layer test methods. The tests will benefit the entire Gigabit Ethernet industry and consumers by ensuring interoperability among vendors and full compliance to the IEEE 802.3 standards," said Bob Noseworthy, 10 Gigabit Ethernet Consortium manager at the university's InterOperability Lab.

"Massana stood out in the Gigabit Ethernet field because of its superior 'smart math' architecture, which delivers better signal-to-noise ratio and lower power consumption, enabling more efficient multiport solutions," said Ed Roberts, vice president and general manager of Agere's new Ethernet Division.

For more information, visit: www.agere.com