U.S. Robotics to be acquired by equity firm Platinum

U.S. Robotics, the Schaumburg-based tech legend famous for pioneering analog modems, is being reborn for the fifth time since it was started in a Chicago garage in 1976.

This time, Robotics is being acquired by Platinum Equity, a Beverly Hills, Calif., private equity firm that has purchased dozens of tech companies over the past decade, to serve as a "platform company" for future purchases of networking and other communications equipment manufacturers, the companies said Monday.

"We recognized that for us to grow, we needed to follow an organic and acquisition growth strategy," said Joseph Hartnett, Robotics' chief executive for the past four years and leader of a management team that took over the company last year. "The reason we like Platinum is that not only do they have the funds to support external acquisition, but they have an experienced mergers-and- acquisition team that can identify, negotiate and close deals, and can help in the operational transition."

The management team and 125 employees, with about 100 in Schaumburg, will remain in place, Hartnett said.

Jim Levitas, senior vice president of mergers and acquisitions at Platinum, said, "The chance to enter a new space with a brand name like U.S. Robotics is very attractive. As a private equity firm, we get excited about platforms. U.S. Robotics is a strong stand-alone company that we can use as a platform for additional acquisitions."

He said Platinum sees an opportunity for growth not only through acquisitions and mergers, but in developing next-generation products in such hot areas as wireless, or Wi-Fi, networks, and wired networking with DSL modems.

He said Robotics still sells analog modems, but that is only a small part of its business.

Hartnett said multimedia networking devices to share audio and video are a new direction for Robotics. Over the past year, he had been seeking $30 million to $50 million in capital investment to take the company to the next level.

Platinum, founded in 1995 by entrepreneur Tom Gores, has specialized in companies in a wide range of markets, including information technology, software, telecom, manufacturing and health care products. Platinum has acquired more than 50 businesses, including from IBM, General Electric, Kemper Insurance and AT&T. Last year, Forbes named Platinum the 32nd largest private company in the United States,

U.S. Robotics, which has 100 million products in use in more than 80 countries, has been a legend in the so-called Silicon Prairie.

Casey Cowell and two friends from the University of Chicago launched U.S. Robotics in a Chicago garage in 1976 to make a device to connect TV sets to time-share computer networks. That product was never produced, but USR scored with modems to connect personal computers to networks and equipment for emerging computer network providers.

The company took its name from a robot manufacturer, U.S. Robots and Mechanical Men, the "greatest company in the known galaxy," mentioned in author Isaac Asimov's "I, Robot" anthology of science fiction stories.

3Com Corp., the Santa Clara, Calif., computer networking company, bought U.S. Robotics in a 1997 stock trade valued at more than $6 billion. At the time, Robotics had $2 billion in sales, and was about to start the personal digital assistant craze with its PalmPilot.