The deal could also include a potential earn-out if certain performance targets are met, all subject to various standard closing conditions. The acquisition is expected to close during the month of July.

The addition of Auvitek's complementary digital components will transform Microtune from a pure-play RF tuner supplier to a developer of RF-to-bits solutions.

Microtune (Plano, Texas) is a supplier of radio frequency (RF) silicon and systems solutions for the cable TV, digital TV (DTV) and automotive entertainment markets. San Jose-based Auvitek is a supplier of DTV demodulator integrated circuits (ICs) for the HDTV and TV-enabled peripherals markets.

Upon the close of the acquisition, Auvitek will be wholly-owned by Microtune. Pete Birch, president and CEO of Auvitek, will become vice president and general manager of the newly-formed Microtune Digital Television Business, reporting to Executive Vice President, Barry Koch.

Under the terms of the agreement, Microtune will pay approximately $6.8 million in cash and one million shares of Microtune stock, with a current value of approximately $2.2 million, for the Auvitek business.