MANHASSET, N.Y. — Agere Systems announced Tuesday (March 8) that it has acquired Modem-Art Ltd., a privately held developer of advanced processor technology for 3G/UMTS mobile devices, for $145.1 million in cash and stock.

Agere (Allentown, Pa.) expects the acquisition to enhance its ability to address rapidly evolving cellular technologies with integrated chips and software for today's 3G market and widely anticipated future demand for HSDPA (High Speed Downlink Packet Access) technology. To date, Agere and Modem-Art have already secured multiple 3G/UMTS designs with leading wireless device manufacturers for phones and PC card applications.

Modem-Art (Raanana, Israel) specializes in developing technology for wideband and broadband communications systems. Its programmable modem engines are designed to deliver the flexibility needed as network technology evolves by being fully software upgradeable, speeding time-to-market for mobile handset vendors. Modem-Art currently markets its MA1050 processor as a fully 3GPP Release 99 and Release 4 standards-compliant physical layer solution.

Under the deal, Agere will pay $30.5 million in cash and will issue approximately 70.3 million shares of its Class A common stock in the acquisition, valued at about $114.6 million based on the closing price of $1.63 on March 7, 2005.

Agere expects to record a one-time acquisition-related charge for purchased in-process research and development expenses in the quarter ending March 31, 2005.

All 40 Modem-Art employees will join Agere and remain in Raanana, Israel.