Mindspeed Technologies, Inc. (NASDAQ: MSPD), a leading supplier
of semiconductor solutions for network infrastructure applications,
today announced that it has signed a definitive agreement to
acquire U.K.-based Picochip Limited, a leading supplier of
integrated system-on-chip (SoC) solutions for small cell base
stations, for a purchase price of approximately $51.8 million, plus
a potential earnout payment of up to $25 million payable in the
first calendar quarter of 2013.
The expected acquisition will create the clear market leader in
small cell base station solutions for next generation mobile
broadband communications infrastructure, an explosive growth
market. Research firm Mobile Experts LLC predicts small cell base
station shipments will grow to 24 million units by 2016, creating a
market for alternative cells, which could exceed the macrocell
market in terms of transceiver unit shipments during the next four
years.
Together, Mindspeed and Picochip will offer the most
comprehensive portfolio of base station semiconductor solutions on
the market, from residential to enterprise to pico/metro
applications. Through this timely combination, Mindspeed's enhanced
product roadmap for single- and multi-mode 3G/4G solutions will
enable it to capitalize on the rapid acceleration of the small cell
wireless base station market, while also addressing comprehensive
support for all 3G and 4G global air interface standards.
Management estimates the total addressable market for the combined
entity will grow to $3.0 billion by 2016. Management also believes
technology synergies, operational synergies and opportunities for
cross-selling products within each company’s customer base are
substantial.
For Picochip, Mindspeed will pay cash of $27.5 million and
approximately 5.19 million in new shares of Mindspeed common stock,
amounting to approximately 15 percent of outstanding Mindspeed
shares, for a total of $24.3 million, based upon the closing price
of Mindspeed’s common stock on January 4, 2012. The cash portion of
the initial purchase price will be financed in part with bank debt.
The terms also include an earnout provision, whereby the purchase
price can increase by up to $25 million, contingent on the
achievement of certain milestones. The earnout, which is payable in
the first calendar quarter of 2013, may be paid in cash, Mindspeed
common stock or a combination thereof, at Mindspeed’s
discretion.
The transaction has been approved by Mindspeed’s and Picochip’s
boards of directors and is subject to certain closing conditions.
The transaction is expected to close in the first calendar quarter
of 2012. Mindspeed currently expects the acquisition, inclusive of
anticipated synergies, to be accretive to non-GAAP earnings per
share in the second half of calendar 2012.
“Our acquisition of Picochip establishes our position as a
global leader in wireless infrastructure semiconductor solutions
for next generation mobile broadband communications,” said Raouf Y.
Halim, chief executive officer of Mindspeed. “It is a great
strategic fit for several reasons. First, it positions Mindspeed as
the clear leader in small cell base station technology with the
industry’s broadest small cell product offering, addressing a
significantly expanded market opportunity of $3.0 billion by 2016.
Second, it enhances our competitive position as we join our
respective 3G/4G technologies to offer single- and multi-mode
solutions that we believe will provide us a time-to-market and
product performance advantage relative to competitors. Third, it
gives us the scale to lead the industry’s move toward fixed/mobile
broadband convergence; a trend which we believe will drive revenue
and earnings growth for Mindspeed in the future.”
Nigel Toon, chief executive officer and president of Picochip,
stated, “Mindspeed is the ideal acquirer for us. Together, we have
valuable technology and customer synergies, given Picochip’s
carrier-qualified 3G wireless technology leadership with over 70
percent market share in 3G/high-speed packet access (HSPA) and
Mindspeed’s proven pathway as the long-term evolution (LTE) small
cell pioneer with the Transcede® product family. Our combined
resources create one of the largest SoC development groups in the
wireless infrastructure sector with complementary intellectual
property scale and expertise to deliver the solutions that this
fast-moving market demands.”
Raymond James & Associates, Inc. is acting as Mindspeed’s
financial advisor, and Wilson Sonsini Goodrich & Rosati,
P.C. is serving as Mindspeed’s legal advisor. Barclays Capital is
acting as Picochip’s financial advisor and Fenwick & West LLP
is serving as Picochip’s legal advisor.
Conference Call and Webcast
Mindspeed will conduct a conference call to discuss the proposed
acquisition of Picochip today, Thursday, January 5, 2012, at 6 a.m.
Pacific Time / 9 a.m. Eastern Time. To listen to the conference
call via telephone, call 800-369-1935 (domestic) or 312-470-7420
(international); password: Mindspeed. To listen via the Internet,
please visit the Investors section of Mindspeed's web site at
www.mindspeed.com. Replay of the conference call will be available
via telephone for a period of 30 days beginning one hour after the
conference call concludes by calling 800-947-6448 (domestic) or
203-369-3538 (international). Replay will also be available in the
Investors section of Mindspeed's web site at www.mindspeed.com
during such 30 day period.
About Mindspeed Technologies
Mindspeed Technologies (NASDAQ: MSPD) is a leading provider of
network infrastructure semiconductor solutions to the
communications industry. The company's low-power system-on-chip
(SoC) products are helping to drive video, voice and data
applications in worldwide fiber-optic networks and enable advanced
processing for 3G and long-term evolution (LTE) mobile networks.
The company's high-performance analog products are used in a
variety of optical, enterprise, industrial and video transport
systems. Mindspeed's products are sold to original equipment
manufacturers (OEMs) around the globe.
About Picochip
Picochip is enabling the next generation of wireless
infrastructure. Its picoXcell™ family of optimized silicon devices
is the leader in the fast growing market for femtocell access
points. Its picoArray™ family of flexible wireless processors is
the leading solution for OFDMA-based network equipment, and is
backed by comprehensive software support for global standards such
as EDGE, HSPA, HSPA+, TD-SCDMA, WiMAX, LTE, cdma2000 and GSM.
Located in Bath, UK and Beijing, China, Picochip is re-shaping
mobile networks.
For more information, visit www.picochip.com and Twitter:
@picochip_femto.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements include statements regarding our
expectations, goals, and intentions with respect to the proposed
acquisition of Picochip. Forward-looking statements include, among
others: statements concerning the impact of the acquisition on our
future non-GAAP earnings per share; anticipated growth in the total
addressable markets for Mindspeed and Picochip as a combined
entity; the market leadership position of the combined entity; and
potential synergies arising from the acquisition. Forward-looking
statements are subject to substantial risks and uncertainties that
could cause actual results and events to differ materially from
those stated in the forward-looking statements. In particular, we
cannot provide any assurances that the anticipated revenue and
expense synergies of the proposed acquisition will be achieved or
that the markets for the products of the combined companies will
develop as we currently anticipate. Acquisition transactions are
subject to inherent risks and uncertainties, including, among
others: risks associated with the successful integration of
geographically separate organizations; the ability to integrate the
two companies’ technologies; the potential for employee attrition;
and the various risks and uncertainties associated with doing
business in international markets. Our existing business is also
subject to numerous risks and uncertainties independent of the
proposed acquisition, including fluctuations in our operating
results and future operating losses; loss of or diminished demand
from one or more key customers or distributors; our ability to
successfully develop and introduce new products; pricing pressures;
and the potential for intellectual property litigation. Additional
risks and uncertainties that could cause our actual results to
differ from those set forth in any forward-looking statements are
discussed in more detail under the caption “Risk Factors” in our
Annual Report on Form 10-K for the fiscal year ended September 30,
2011 and in our future filings with the SEC.
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