NXP is to acquire Conexant's set-top box operations

"With this transaction, NXP's existing set-top box and digital TV operations will be combined with Conexant's BMP [broadband media processing] business," said NXP. "The combined operations will create a top three player in digital video systems with the scale to establish a strong leadership position."

The deal represents NXP's fourth acquisition since independence from Philips, and is the first for its Home Business Unit

Conexant's BMP operation makes chips for satellite, cable and Internet TV and accounted for $205m in revenue in 2007.

Under the terms of the deal, NXP will pay $110m in cash up front, and additional consideration of up to $35m based on achievement of certain revenue milestones over the period from closing through 2009.

"Conexant's strengths in broadcast operator set-top box [STB] solutions are complementary to NXP's terrestrial IP and retail STB and digital TV products," said NXP. "Combined, they will offer the widest semiconductor portfolio for STB and digital TV applications in the industry, creating a unique technology source for developing digital video applications."

When the transaction closes, around 700 Conexant employees at locations in the Northern Ireland, US, India, Israel and China will join NXP's Home Business Unit.

Conexant's BMP offerings include: silicon tuners, demodulators, MPEG audio and video decoders, and modems.