Ember CEO: Silicon Labs Acquisition for $72M Is “Right Thing for the Company”

It seems like it takes most tech companies about 10 years to run their course—if they survive the first few years, that is. Boston-based Ember is no exception.

The wireless-networking firm said today it is being acquired by Silicon Laboratories (NASDAQ: SLAB) of Austin, TX, for an initial price of $72 million plus earnouts. Silicon Labs makes chips for consumer devices like TVs and cell phones, as well as applications in telecom, industrial, and automotive markets. The acquisition appears to be a good fit, as Ember’s technology—particularly its wireless networking software—will strengthen and broaden Silicon Labs’ offerings across industries.

The deal seems to be an OK, but not great, outcome for Ember’s investors. Over the years, the firm raised some $89 million from venture capitalists and strategic partners including Polaris Venture Partners, GrandBanks Capital, RRE Ventures, Vulcan Capital, STMicroelectronics, Hitachi, and MIT.

Ember CEO Bob LeFort defends the acquisition on three counts. One, “This was more than a fair deal financially,” he says, in terms of the multiple of the company’s revenue. Two, he says, “This is also about the employees and the potential, and it’s the right thing for the company.” And three, he says, the firm’s investors saw Silicon Labs as the right acquirer at the right time, because Ember needed more investment to reach a bigger market. While everyone loves a $15 billion IPO, he says, “It just made sense. This is not a reluctant deal for them.”

Indeed, Bob Metcalfe of Polaris—an Ember board member and a professor at UT Austin—calls Silicon Labs “the perfect partner going forward,” in terms of its product line (more on that below).

The deal is pretty significant for those of us who’ve followed Ember since its early days. The company started in 2001, the brainchild of MIT grads Rob Poor and Andy Wheeler. Their vision was to build software for wirelessly networked sensors and systems for supply-chain management, factories, and other applications.

Poor and Wheeler eventually moved on to other companies, but Ember evolved to become a maker of software, chips, and tools for secure wireless networking. Its main market is smart energy—working with utility companies and selling its technology to smart-meter makers like Itron and Landis+Gyr, so the meters can talk to the utilities and help make the power grid more efficient and reliable.

Reached by e-mail, Poor says, “From what I can tell it’s a great thing.” Citing Ember’s talent, technology, and reputation in the wireless industry, the firm’s co-founder elaborates: “The Silicon Labs acquisition means that Ember will have the financial and marketing resources to do even more. Also—as someone who cares deeply about the people that make up a company—I’m really glad about the acquisition since it will give everyone at Ember a little more room to breathe and innovate.”

The vast majority of Ember’s 60-odd employees are staying through the merger, LeFort says, and the company is keeping … Next Page »

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Gregory T. Huang is Xconomy's Editor in chief. E-mail him at gthuang [at] xconomy.com. Follow @gthuang

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