CSR to acquire Zoran

CSR PLC and Zoran Corporation NASDAQ: ZRAN) have entered into a merger agreement (the “Merger Agreement”) under which Zoran will merge with CSR (the “Merger”) for an equity value equivalent to approximately US$679 million* (the “Transaction Value”). Under the terms of the Merger Agreement, it is proposed that Zoran shareholders will receive 1.85 ordinary shares of CSR in the form of American Depositary Shares (each an “ADS”), , for each share of Zoran common stock held. In addition, CSR announces that it intends to return up to US$240 million to shareholders via an on-market share buyback programme (the “Share Buyback”).

CSR is a global leader in wireless connectivity and location. Zoran provides market-leading imaging and video technology for digital camera, home entertainment and multifunction printer products. In 2010, Zoran had total pro forma revenues of $441 million.

Strategic rationaleThe merged company will provide differentiated, integrated technology that addresses the rapidly growing market for connected, location-aware multimedia devices including handsets, digital cameras and home entertainment equipment. Combining the two highly complementary technology portfolios is designed to uniquely position the merged company to deliver advanced platforms to capture and stream media-rich content. This will strengthen the ability of the combined customer base to provide differentiated products to the end consumer.

Transaction overviewZoran shareholders will receive ADSs representing the equivalent of 1.85 ordinary shares of CSR for each share of Zoran common stock held, which, as at close on 18 February 2011 represents a value of US$13.03 per share of Zoran common stock or a total consideration of approximately US$679 million. In addition, CSR plans to buy back up to US$240 million of CSR’s ordinary shares during the next 12 months via an on-market buyback programme. The Share Buyback is intended to achieve an overall financial impact on CSR broadly equivalent to a transaction structured with approximately 65% stock and 35% cash. The Share Buyback, which will replace the US$50 million programme announced on 13 September 2010, of which approximately US$37 million has been expended, is expected to commence as soon as practicable following this announcement.

The other key aspects of the transaction are:

• The implied offer price represents a premium of approximately 39.9% to the closing price of each share of Zoran common stock of US$9.32 on 18 February 2011, the last Business Day before this announcement, and a premium of approximately 44.0% to the average closing price of shares of Zoran common stock over the past twelve months;
• Net of Zoran’s cash balance of US$261 million as at 31 December 2010, the Transaction Value implies an enterprise value of US$418 million;
• Following completion, Zoran shareholders will own approximately 35% of the enlarged CSR group on a fully diluted basis as of 18 February 2011; ordinary shares of CSR will be issued to Zoran shareholders through a new sponsored American Depositary Shares (“ADS”) programme and application will be made to have the ADSs admitted to trading on the NASDAQ Stock Market.

CSR’s Chairman, CEO and CFO will lead the merged company. Dr. Levy Gerzberg, Co-Founder, President, CEO and Director of Zoran will be joining the CSR board as a Non-Executive Director. Zoran will also propose one additional independent Non-Executive Director to join the CSR Board.

Completion is expected in the second quarter of 2011 and is subject to CSR and Zoran shareholders and regulatory approvals and other customary closing conditions.