Tessera Technologies, Inc., provider of miniaturization technologies for the electronics industry, announced it has signed a definitive agreement to acquire Eyesquad, a leader in the development and design of digital auto-focus and optical zoom solutions for camera phones and other electronic products that integrate cameras. Eyesquad's advanced technology automatically brings objects into focus without the use of moving parts. By providing significant cost, size, reliability and power benefits over mechanical approaches used today, Eyesquad's technology is designed to open up new, high volume market opportunities. The acquisition of Eyesquad is the latest component in Tessera's long-term consumer optics growth strategy and builds upon the transactions with Shellcase Ltd. and Digital Optics Corporation in 2005 and 2006 respectively.

Under the terms of the agreement, Tessera will purchase for cash all outstanding Eyesquad equity. The transaction is subject to customary closing conditions, and is expected to close in the first quarter of 2007. The acquisition was structured as a purchase of all of the outstanding equity of Eyesquad at an enterprise value of approximately $18 million, composed of a cash payment of approximately $20 million, less approximately $2 million cash on  Eyesquad's balance sheet at the time of closing.

"Tessera continues to expand its business through its investments in the consumer optics market," said Bruce McWilliams, Tessera's Chairman and Chief Executive Officer. "Our acquisition of Eyesquad will further strengthen our technology offering for this rapidly growing market."

"Eyesquad's proprietary lens design and image processing technologies make it possible for all objects from 10 cm to infinity to be brought into focus automatically and simultaneously," continued McWilliams. "Since there are no moving parts, the solution provides size, cost, reliability and power advantages over existing mechanical technologies for focus and zoom. This is particularly important for small form factor, high volume electronics such as camera phones."

"Tessera is one of the industry's leading technology development and licensing companies," said Hans Wagner, Eyesquad's Chairman. "This acquisition will enable Eyesquad to translate its technically advanced solutions into licensable technologies that are made broadly available to the global electronics industry."

Combining Eyesquad's technology with Tessera's Digital Optics and Shellcase technologies enables Tessera to provide greater capability in even more highly integrated and miniaturized form factors. As a result, the company plans to provide image sensor and camera module manufacturers a high-value, low-cost camera module solution that includes advanced auto-focus and optical zoom, wafer level packaging, and wafer-level optics, all of which can be licensed from a single source. According to market research firm Prismark, the market for electronics which include cameras, such as camera phones, notebooks, security and automotive electronics, will increase to approximately 1.7 billion units in 2010.

"Tessera plans to license its auto-focus and optical zoom technology broadly, deriving revenue from licensing fees, royalties and associated product development services," stated Charlie Webster, Tessera's Chief Financial Officer. "We do not expect Eyesquad revenues and expenses to be material in 2007. Eyesquad's technology is currently being evaluated by leading companies in the electronics industry. Once the acquisition is completed, Eyesquad will become a wholly-owned subsidiary of Tessera and will be integrated with our Tessera Israel Operations."

Eyesquad's R&D center is located in Tel-Aviv, Israel. Eyesquad is led by several well-known industry veterans, including Eyesquad's Chairman, Dr. Hans Wagner. Wagner was vice-chairman of M-Systems (acquired by SanDisk) from 2002 - 2006 and Chairman of Technophone (acquired by Nokia) from 1984 - 1992. www.tessera.com