Platinum Equity, the buyout firm owned by billionaire Tom Gores, is acquiring computer modem maker U.S. Robotics Corp. in an all-cash deal, the companies are expected to announce today.
Neither side would reveal terms of the sale. Last year, however, Robotics Chief Executive Joseph J. Hartnett told an interviewer that he was looking for a buyer willing to pay between $30 million and $50 million for the Schaumburg, Ill., company.
U.S. Robotics will retain its current management and structure and be used to acquire other technology firms, said Jim Levitas, senior vice president of mergers and acquisitions at Platinum.
"We see U.S. Robotics as a very exciting platform that we can use to grow both organically and through acquisitions," Levitas said.
The deal is the latest in a series of purchases by Beverly Hills-based Platinum, which has gobbled up more than 50 businesses over the last decade.
Platinum now operates some 22 technology and manufacturing firms that collectively employ 43,000 people and generate $8 billion in annual revenues.
U.S. Robotics was launched in 1976 by three University of Chicago students in their Skokie, Ill., garage.
The company was named after the fictional "greatest company in the known galaxy" in Isaac Asimov's science fiction novel "I, Robot."
It eventually became the leading seller of dial-up computer modems and was purchased by 3Com Corp. in 1997 for $6 billion.
3Com spun off U.S. Robotics in 2000, and the company has struggled as demand for dial-up modems withered with the expansion of high-speed cable, DSL and wireless computer networking systems.
The company is expanding into wireless networking gear and other equipment, but "it is a shadow of what it used to be," said industry analyst Martin Reynolds at Gartner Inc. in San Jose. U.S. Robotics employs 125 workers and posted 2004 sales of about $150 million.
"The company built their name around modems, but the days of modems are long past," Reynolds said. "They've got retailers and shelf space, but they're playing in a crowded market with a product that's largely a commodity."
U.S. Robotics has since refocused to concentrate on wireless technology, but it desperately needed cash to grow, Hartnett said. That made the tie with Platinum a good fit, he said.
"We see them as having exactly what we need," Hartnett said in an interview. "They bring not only the capital but the expertise to enact acquisitions."
Businesses in evolving industries are precisely what Platinum finds enticing, Levitas said.
"One of the things Platinum looks for is companies that are undergoing technological transformations," Levitas said. "We go in as a partner, investing in technology to help the company along that transition."
Gores, 40, was traveling and could not be reached for comment. However, his Platinum Equity has been growing rapidly in recent years, largely through acquisitions.
The company bought Dallas-based information technology firm CompuCom Systems Inc. for $254 million a year ago. Its portfolio also includes Anaheim-based Altura Communication Solutions, a voice messaging firm, and American Racing Equipment Inc. of Rancho Dominguez, which provides high-performance automotive wheels.