Mindspeed Technologies will acquire Picochip Limited for about $51.8 million. In addition, there is a potential earnout payment of up to $25 million payable in the first calendar quarter of 2013. The transaction has been approved by the boards of directors of Mindspeed and Picochip. The acquisition is subject to certain closing conditions, and is expected to close in the first calendar quarter of 2012. Picochip is a supplier of integrated system-on-chip (SoC) solutions for small cell base stations.
As a result of the acquisition of Picochip, Mindspeed will be able to offer the most comprehensive portfolio of base station semiconductor solutions on the market, from residential to enterprise to pico/metro applications. 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. According to Mindspeed, the total addressable market for the combined entity will grow to $3.0 billion by 2016. Mindspeed also believes technology synergies, operational synergies and opportunities for cross-selling products within each company’s customer base are substantial.
Mindspeed will pay $27.5 million in cash and roughly 5.19 million in new shares of Mindspeed common stock. This will represent about 15% 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. At Mindspeed’s discretion, the earnout may be paid in cash, Mindspeed common stock or a combination thereof.
Mindspeed conducted a conference call to discuss the proposed acquisition of Picochip on Thursday, January 5, 2012. A replay of the conference call is available via telephone for a period of 30 days by calling 800-947-6448 (domestic) or 203-369-3538 (international). The replay is also available in the investors section of Mindspeed’s web site.