SHELTON, Conn. (AP) -- Chip maker TranSwitch Corp. said Wednesday it agreed to buy Centillium Communications Inc. in a cash and stock deal that values the maker of chips for high-speed networking at about $42.8 million, or $1.02 per share.
TranSwitch said Centillium shareholders will receive 25 million newly issued common shares of TranSwitch plus $15 million. Shareholders will receive 36 cents and .5958 TranSwitch common shares for each Centillium common share they hold.
TranSwitch said the Centillium acquisition will add fiber-to-the-home and Voice over Internet Protocol products to its offerings.
TranSwitch said it has identified $10.5 million in annual expense savings in the deal. The company believes the deal will help its earnings in the first complete quarter after it closes.
The deal is expected to be completed in the fourth quarter.
When the transaction is completed, TranSwitch will have about 158 million outstanding shares, about 84 percent held by current TranSwitch stockholders and about 16 percent held by current Centillium stockholders.
Both companies' boards have approved the deal, and it must still be approved by Centillium shareholders.
TranSwitch shares fell a penny to close at $1.11. Centillium shares finished regular trading down 4 cents, or 6.4 percent, at 59 cents.