China’s Tsinghua Unigroup Ltd. and Spreadtrum Communications, Inc., a leading Chinese fabless semiconductor provider, have entered into a definitive merger agreement.
The merger values Spreadtrum's equity at approximately $1.78 billion, on a fully diluted basis. The transaction is subject to approval by the shareholders of Spreadtrum, and antitrust and other regulatory approvals, and is not subject to any financing condition.
Spreadtrum was founded in 2001 and is headquartered in Shanghai, China with R&D centers in Shanghai, Beijing and Tianjin, China and San Diego. Its products support a broad range of wireless communications standards, including GSM, GPRS, EDGE, TD-SCDMA, W-CDMA, HSPA+ and TD-LTE.
Tsinghua Unigroup will acquire all of the outstanding Ordinary Shares of Spreadtrum for $31.00 per American Depositary Share (or $10.33 per Ordinary Share, each American Depositary Share representing three Ordinary Shares). Tsinghua Unigroup Ltd. is an operating subsidiary of Tsinghua Holdings Co. Ltd., a solely state-owned limited liability corporation funded by Tsinghua University in China.
Both companies board of directors will be urging its shareholders to approve the transaction.
Spreadtrum develops mobile chip set platforms for smartphones, feature phones and other consumer electronics products, supporting 2G, 3G and 4G wireless communications standards. Its revenues were approximately $720 million in 2012.
Spreadtrum's turnkey platform solutions combine its chip sets with customizable software and reference designs for global and China-based manufacturers developing mobile products for consumers in China and emerging markets around the world.
"We believe Spreadtrum and Tsinghua Unigroup will supplement each other and create enormous synergies in China and abroad," said Zhao Weiguo, chairman and chief executive of Tsinghua Unigroup.
"Spreadtrum's capable and talented management team will be encouraged to continue their strong performance and innovative corporate culture, while Tsinghua Unigroup is in the unique position to offer unique expertise in consumer products, protection and support from a vast IP portfolio, and unique access to important capital markets in China."
"The acquisition positions the Spreadtrum business for continued growth," said Leo Liyou Li, chairman and chief executive of Spreadtrum. “The vast IP portfolio of Tsinghua Unigroup and Tsinghua University also gives the original Spreadtrum business advantageous boosts in the area of IP protection.”