Microchip Technology Inc. said Thursday (May 22) it signed a definitive agreement to buy Taiwan-based ISSC Technologies Corp., a provider of low-power Bluetooth and wireless chips for Internet of Things (IoT) applications for about $329 million.
ISSC (Hsinchu, Taiwan) is publicly traded on the GreTai Securities Market. The company has 2013 sales of about $69.2 million, according to Microchip (Chandler, Ariz.).
Under the terms of the deal, Microchip will commence a tender offer to acquire all of the outstanding shares of ISSC for about $4.74 per share, Microchip said. The company has also agreed to buy any remaining shares following the initial acquisition in a follow-on merger, Microchip said.
The acquisition has already been approved by each company's board of directors, Microchip said. It is expected to close in the third quarter, subject to approval of the follow-on merger by ISSC stockholders, Microchip said.
The ISSC deal is the latest of several acquisitions Microchip has announced over the past two years. In February, Microchip agreed to pay $394 million in cash for power semiconductor vendor Supertex Inc. In November 2013 Microchip announced the acquisition of EqcoLogic NV (Brussels, Belgium), a developer of equalizer and transceiver ICs for coaxial cable signal transmission. In 2012 Microchip acquired Roving Networks a vendor of Bluetooth wireless modules and other connectivity solutions. In the same year Microchip acquired Standard Microsystems Corp. for about $750 million bringing expertise in low-power USB, Ethernet, wireless audio and automotive applications.
Microchip said it has entered into an agreement with certain ISSC shareholders holding approximately 28 percent of the outstanding shares of ISSC pursuant to which such shareholders have committed to tender approximately 17 percent of the outstanding shares of ISSC, which represents all unrestricted ISSC shares owned by them.
"ISSC's deep domain knowledge in Bluetooth and wireless technologies, and strong position in the consumer markets, complement many of Microchip's initiatives in wireless and IoT areas," said Ganesh Moorthy, Microchip's chief operating officer, in a statement. "We believe that combining ISSC's strengths in wireless products and technology with Microchip's brand, channel and operational strengths will enable significant cross selling opportunities."
Steve Sanghi, Microchip's president and CEO, noted that the deal would be Microchip's first major overseas acquisition. The deal will be financed with a portion of Microchip's foreign cash reserves and not require the company to borrow any additional funds from its line of credit, Sanghi said.
"We believe the combination of a very strategic transaction that provides low power Bluetooth technology, ISSC's strengths and capabilities and our use of foreign cash makes this a compelling transaction for the shareholders of both companies," Sanghi said.