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Struggling chipmaker Conexant Systems Inc. (NASDAQ:CNXT) has taken another step in streamlining its business, announcing Wednesday an agreement to sell its broadband access unit to Ikanos Communications Inc. (NASDAQ:IKAN) for $54 million in cash.

A year ago, Conexant sold its broadband set-top box technology business to NXP Semiconductors for up to $145 million in a move to help the company revamp its business model and cost structure (Pipeline subscribers can read more about that deal here).

The agreement with Ikanos is a move toward the same goal and could be Conexant's last divestiture, chairman and CEO Scott Mercer seemed to suggest.

"When the transaction is completed this summer, the continuing Conexant will be focused exclusively on providing solutions for imaging, audio, video, and various embedded-modem applications," he said in a statement. "We occupy leading positions in each of these areas, which are expected to grow over the next several years."

For Ikanos, the deal brings in a major new investor. In connection with the transaction, the broadband chipmaker said Tallwood Venture Capital has agreed to acquire 24 million shares of its common stock for $42 million. Tallwood also will receive warrants to acquire another 7.8 million shares. Not counting the warrants, the deal gives the semiconductor-focused VC firm a 45% stake in Ikanos, and board seats for general partner Pavlov and managing partner Dado Banatao.

Banatao is well-known in chip investing circles, having backed several prominent chip companies including Marvell Technology Group Ltd. (NASDAQ:MRVL) and NewPort Communications Inc., which was sold to Broadcom Corp. (NASDAQ:BRCM) for $1.24 billion in 2000..

The deal will bring 400 employees to Ikanos and double its revenue, the company said. It might also answer the question of which strategic alternative Ikanos was considering, a question first raised when it hired Barclays Capital in October. - Olaf de Senerpont Domis

Source: Conexant / Ikanos Deal Streamlines Struggling Chipmaker