Tut Systems Inc. to Buy Copper Mountain Networks for 0.71 Times Revenue

Weekly Corporate Growth Report, Feb 21, 2005

The Deal: Tut Systems Inc. has agreed to purchase Copper Mountain Networks Inc. in an all-stock transaction valued at $10 million, or $1.25 million per share. Under the terms of the deal, Tut Systems will issue about 2.5 million common shares at the close of the transaction. The deal is expected to close in the second quarter of 2005, subject to customary closing conditions. The deal still requires approval from Copper Mountain shareholders.

Discussion: Copper Mountain Networks develops digital subscriber line (DSL) communications products used to enable high-speed connectivity over existing copper phone lines. Company customers include US phone service and Internet service providers.

Tut Systems manufactures communications equipment used to provide Internet access, high-speed data delivery, and interactive TV to residential and commercial customers. Tut also sells digital TV encoders and switches.

After the deal closes, Tut intends to use Copper Mountain's intellectual property and products to develop new video technologies. Copper Mountain's product and engineering operations will be refocused on the Internet protocol for television industry.