Fabless audio IC vendor Cirrus Logic Inc. has offered to buy rival Wolfson Microelectronics plc for £2.35 per share in cash and a total price of £278 million (about $467 million). The deal is being financed from the balance sheet and with a $225 million loan.
The move reflects Cirrus's recent healthy financial results – the company made a net profit of $12.6 million on sales revenue of $149.7 million in its fourth fiscal quarter, which ended March29 – and Wolfson's expected poor results. Wolfson has reported a net loss of $4.6 million on sales revenue of $28.8 million in its first quarter ended March 30. Wolfson's sales fell from $42.0 million in the previous quarter and from $48.1 million in the same quarter a year before although the company has forecasted a stronger second half of the year based on a number of design wins for its audio hubs and MEMS microphones.
The price offered by Cirrus is a 75 percent premium over yesterday's closing price of 134 pence for Wolfson shares and as part of the reporting of the financial results the board of directors recommended acceptance of the offer.
The move expands Cirrus Logic's customer base. Cirrus has enjoyed much success through design wins in Apple products while Wolfson, which had been successful with Apple in the previous decade has struggled after it lost business with Apple in 2008.
"Wolfson has a rich history of audio innovation, a broad catalog of audio products and a first class customer list," Cirrus Logic CEO Jason Rhode, in a statement. "This acquisition strengthens Cirrus Logic's core business as a leader in audio signal processing components, enhances our ability to differentiate our products with software, and adds new product categories such as MEMS microphones to our portfolio."
"Together with Cirrus Logic, we believe this will create a powerful platform for future growth, above and beyond our standalone potential," said Michael Ruettger, chairman of the board of directors of Wolfson Microelectronics, in the same statement.
The acquisition is expected to complete in the second half of 2014.
Wolfson employs about 420 staff, while Cirrus has 760 employees. There are expected to be some job losses as a result of the merger with approximately 10 percent of the combined workforce being cut within a year. However these cuts are likely to be in duplicated functions and sales and marketing positions rather than engineering, according to reports.
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