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 Qualcomm, the world's number one mobile chipmaker, has agreed to pay
900 pence a share in cash for CSR, a 56.5 percent premium on the
share price before the start of the offer period in August, CSR said
on Wednesday.
At that time, the British company rebuffed an approach from U.S.
chipmaker Microchip Technology <MCHP.O>, saying its undisclosed
offer was not enough. The two had remained in talks to reach a deal,
with a deadline imposed by UK regulators for Wednesday.
There is a chance alternative bidders may emerge, Jeffries analyst
Robert Lamb told investors in a research note, although he cautioned
that the high multiple relative to recent chip mergers which
Qualcomm is paying may prove difficult to trump.
"With a firm price now in the open, it could tempt others to play
their hand," Lamb said.
Qualcomm Chief Executive Steven M. Mollenkopf said the addition of
CSR would allow it to diversify into the markets for short-range,
wireless Bluetooth chips and audio processing used in portable
audio, automotive controls and wearable devices.
"Combining CSR’s highly advanced offering of connectivity
technologies with a strong track record of success in these areas
will unlock new opportunities for growth," he said.
Qualcomm, the dominant maker of chips used in smartphones, has been
looking to expand beyond the phone market into emerging areas such
as wireless home appliances and other connected devices that fly
under the banner of "The Internet of Things."
In May, it agreed to acquire Wilocity, a maker of wireless HDMI
connections, used to transmit video between computers and displays,
and it developed AllJoyn, an open-source platform that allows
devices to share information with other nearby devices.
CSR Chief Executive Joep van Beurden said the two companies were a
good combination.
"If you look at us, we are focused on all the accessories around the
phone," he told Reuters.
"In voice and music, we are strong in headsets, soundbars and
speaker docks; and we are strong in cars, which more and more are an
extension of the phone with infotainment."
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Jeffries analyst Lamb labeled the merger "a good fit", advising
clients that, "Clearly they (Qualcomm) have gone down the 'buy'
rather than 'make' route."
CSR, short for Cambridge Silicon Radio, specializes in connectivity,
with its chips used in products such as portable audio speakers and
Apple-owned <AAPL.O> Beats headphones. It was a pioneer in the
market for wireless Bluetooth technology, which is now mushrooming
in popularity for use in wireless audio speakers, network-connected
appliances in homes and for use in so-called "connected car"
features in autos.
Microchip, a diversified maker of analog and digital chips based in
Chandler, Arizona, together with CSR, had announced in late August
that they were in preliminary talks on a merger.
Last week, Microchip shocked stock markets worldwide by warning it
expected lower quarterly sales and going further to make a sweeping
prediction that the chip industry at large was likely to suffer a
broad downturn over the coming quarters.
CSR was advised by J.P. Morgan Cazenove and Goldman Sachs, while
Qualcomm was advised by Deutsche Bank.
(Reporting by Paul Sandle and Eric Auchard; Editing by Kate Holton
and Elaine Hardcastle)
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