Programmable logic chip supplier Lattice Semiconductor Corp. has signed an agreement to acquire Silicon Image Inc. a vendor of chips for consumer, mobile multimedia applications. Lattice (Hillsboro, Oregon) is offering $7.30 per share, or $450 million in a cash deal, which represents a 23.7 percent premium to the Silicon Image closing price on January 26, 2015. It also represents an equity value of the acquisition as $600 million, Lattice said.
Silicon Image (Sunnyvale, Calif.) was founded in 1995 and went public in 1999 and, along with others, helped develop such consumer electronic standards as HDMI and WirelessHD. However, the company has come under criticism that it has not done enough to capitalize on those technical achievements.
The transaction has been unanimously approved by the boards of directors of both companies and is expected to close by the end of March 2015. The transaction will be funded through a combination of cash on hand and new debt financing, Lattice Semiconductors said adding that it has received a commitment of $350 million from Jefferies Finance LLC.
In February 2014 Silicon Image announced it was entering the small cell backhaul market with a beam-steering IC for 60GHz RF transceivers. In December 2014 the company announced that Qualcomm had taken a 7 percent stake in a Silicon Image subsidiary called Qterics that was targeting the Internet of Things. And in January 2015, Silicon Image relaunched its SiBeam subsidiary to drive wireless products focusing on millimeter-wave technologies.
“This is a truly transformative event for both Lattice Semiconductor and Silicon Image," said Darin Billerbeck, CEO of Lattice, in a statement. "For the first time in the semiconductor industry, a single company will combine the design flexibility and time to market benefits of FPGAs, with the highly integrated, function and cost optimization benefits of ASSP solutions. We are excited to move forward with Silicon Image and confident we will be able to drive higher revenue and earnings growth, through the benefits of better economies of scale and material cost synergies."
Silicon Image CEO Camillo Martino said: "Importantly, Lattice shares our commitment to building upon Silicon Image’s rich history of standards creation and the development of new wired and wireless connectivity innovations. This transaction is the culmination of a strategic process conducted under the direction of our board of directors, and represents a significant creation of value for our shareholders."
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