TranSwitch Announces Plans To Acquire Mysticom Ltd.

Shelton, CN -- TranSwitch Corporation announced that it has entered into a definitive agreement to acquire Mysticom Ltd., a privately-held developer of high-performance, low-power, multi-Gigabit Ethernet transceivers for the communications industry. With this acquisition, TranSwitch gains in-house capability to integrate high-speed SerDes and PHY technology into its future Envoy, PHAST, and EtherMap series of products.

"Integrated SerDes capabilities in our PHAST-12N, EtherPHAST(TM)-48 Plus, PHAST-48V, and VTXP-48 have been a strong differentiator for us. We acquired SerDes IP (intellectual property) for these products from third parties. As we move into our next series of Envoy, PHAST, and EtherMap products with 10 Gigabit SONET/SDH and Ethernet interfaces, we need to continue to integrate SerDes and PHY functions. External IP for 10 Gigabit SerDes and PHY is not readily available, and Mysticom's proven capability in analog/mixed-signal design and in these technologies will enable TranSwitch to continue it strategy of integrating SerDes and PHY capabilities in its next-generation products," said Santanu Das, president and CEO of TranSwitch.

"TranSwitch continues to be committed to achieving operating break-even in the second half of 2006, and it is our objective that this acquisition will be cash-flow and P&L neutral in this timeframe," continued Dr. Das.

Mysticom, a fabless semiconductor company, currently designs, develops and markets 10 Gigabit Ethernet transceivers for a variety of applications, including data center, enterprise, server, storage and high definition video. Mysticom's family of 10 Gigabit Ethernet transceivers delivers superior interconnect performance over a variety of cable media and is fully compliant with CX4, LX4, and XAUI standards. The patented designs of these products provide extremely low-power consumption in very small form factors. TranSwitch will continue to market and support these products and work actively to integrate these functions into its future higher-speed devices for Carrier-class applications.

Mysticom also markets intellectual property (IP) cores for Fast Ethernet (10/100) and Gigabit Ethernet (GbE) PHY applications. TranSwitch will continue to support these activities.

"We are delighted to join the TranSwitch team," said Neil Vasant, CEO of Mysticom. "TranSwitch has an unmatched portfolio of Carrier-class Ethernet controllers and Mysticom's PHY technology complements TranSwitch's strengths in this area. The synergy in our respective spheres of expertise will enable TranSwitch to extend its leadership in the Carrier-class Ethernet market."

TranSwitch is expected to acquire the Israel-based company through the issuance of approximately $5 million of TranSwitch Common Stock. Upon the satisfactory achievement of certain revenue objectives and a positive operating cash flow over the next 12 months, TranSwitch will pay up to an additional $10 million in the form of TranSwitch stock or cash, at its option. The transaction is expected to be completed in TranSwitch's first quarter ending March 31, 2006, subject to customary closing conditions and requisite regulatory approvals. Mysticom Ltd. will operate as a wholly owned subsidiary of TranSwitch.

SVB Alliant, the investment banking subsidiary of SVB Financial Group, exclusively represented Mysticom Ltd. in this transaction.

SOURCE: TranSwitch Corporation