Monday, January 23, 2012

Semtech to Acquire Gennum

CAMARILLO, Calif. & BURLINGTON, Ontario--(BUSINESS WIRE)--Semtech Corporation (Nasdaq: SMTC), a leading supplier of analog and mixed-signal semiconductors, and Gennum Corporation (TSX:GND), a leading supplier of high speed analog and mixed-signal semiconductors for the optical communications and video broadcast markets, today announced they have entered into a definitive arrangement agreement (“Arrangement Agreement”) for Semtech to acquire all of the outstanding shares of Gennum for a total consideration of approximately CDN$500 million (approximately US$494 million based on the exchange rate on January 20, 2012 of CDN$0.9868 to US $1.00).

Semtech management believes the acquisition of Gennum will extend Semtech’s leading portfolio of infrastructure products to the metro, access and enterprise computing markets and will enable Semtech to provide its customers with more platforms to differentiate their own high-speed voice, video and data transmission products. The combination will enable Semtech to deliver a broader range of best-in-class solutions aimed at helping its customers create differentiated communication equipment to solve increasing bandwidth bottlenecks in the network.

Gennum designs and sells products that enable video, data and multimedia content to be transmitted at high speed over long distances, while maintaining signal integrity and eliminating the potential for errors in transmission. Its products are used in broadcast, networking, storage, telecommunications and consumer connectivity equipment. Gennum is positioned to benefit from the growth in worldwide demand for bandwidth and is a market leader in broadcast video, high–speed optical communications, high definition video surveillance, Thunderbolt active cable transceivers and backplane signal integrity.

Gennum was founded in 1973 and is headquartered in Burlington, Ontario, Canada. Gennum has approximately 450 employees, including more than 240 engineers, and has offices in Canada, Germany, India, Japan, Mexico, Taiwan, the United Kingdom and the United States.

“We are very excited with the acquisition of Gennum Corporation,” stated Mohan Maheswaran, President and Chief Executive Officer of Semtech. “We believe Gennum’s unique signal integrity solutions and highly differentiated 1 Gbps to 25 Gbps optical products combined with Semtech’s leading 40 Gbps and 100 Gbps SerDes portfolio will deliver one of the industry’s most complete and robust portfolios to the communications infrastructure, data communications and enterprise computing segments. Additionally, Gennum’s strong position in video broadcast and the emerging HD video surveillance market broadens and further diversifies Semtech’s portfolio of high-performance analog semiconductors targeted at fast growing markets.”

“We are delighted to join Semtech Corporation, a company with a rich history of great engineering innovation and a strong position in several attractive high-growth markets. After a comprehensive review of Gennum’s strategic options, we are convinced that this is the best avenue to unlock the underlying value for shareholders that has been created by the Gennum team,” said Franz J. Fink, President and Chief Executive Officer of Gennum. “Our employees have been instrumental in building Gennum and will remain a critical component of the combined company as we move forward in the next chapter of our development. Together, Gennum and Semtech will form a stronger company, capable of accelerating growth beyond what would have been possible as separate entities.”

Semtech expects to finance the acquisition through a combination of cash on hand and new bank financing. The company has received a financing commitment of up to US$400 million from Jefferies Finance LLC. The proposed transaction is not subject to a financing condition.

Semtech estimates that the acquisition will result in at least $15 million in annual synergies, which Semtech expects will be achieved in full in Semtech’s fiscal year 2014. Semtech’s management expects that the acquisition will be accretive to non-GAAP earnings per share by more than 20 cents in fiscal year 2013 and more than 40 cents in fiscal year 2014. Semtech will provide further guidance upon the closing of the transaction.

Additional Transaction Details

Under the terms of the Arrangement Agreement, upon closing of the proposed transaction, shareholders of Gennum (“Gennum Shareholders”) will receive CDN$13.55 in cash for each common share of Gennum held. The proposed transaction will be completed through a plan of arrangement under the provisions of the Ontario Business Corporations Act.

The transaction has been reviewed by a Special Committee of the Board of Directors of Gennum and has been unanimously approved by the Board of Directors of Gennum following the unanimous recommendation of the Special Committee. The Board of Directors of Gennum has also unanimously determined that the transaction is fair to its shareholders, that it is in the best interests of Gennum to support the transaction and recommends that the shareholders of Gennum vote in favor of the transaction. The Special Committee and the Board of Directors have received an opinion from Canaccord Genuity Corp. that as of the date of the opinion and subject to the assumptions outlined therein, the consideration payable to Gennum shareholders under the transaction is fair, from a financial point of view.

The Arrangement Agreement contains, among other things, a CDN$19.35 million termination fee payable by Gennum in certain circumstances. Semtech has also been granted a right to match competing proposals.

The transaction will require the approval of at least 66⅔% of votes cast by Gennum Shareholders represented in person or by proxy at a special meeting of Gennum Shareholders (the “Gennum Meeting”), expected to be held in mid-March 2012. In addition to Gennum Shareholders’ approval, the transaction is subject to the satisfaction of certain other closing conditions customary in a transaction of this nature, including the approval of the Ontario Superior Court of Justice, in accordance with Ontario law. The transaction is not subject to the receipt of any regulatory approvals, other than the Ontario Superior Court of Justice approval required to effect an arrangement under Ontario law. The approval of shareholders of Semtech is not required in connection with the proposed transaction.

Gennum anticipates declaring its regular quarterly dividend, prior to the closing date, subject to the discretion of the Board of Directors of Gennum and legal requirements.

Further information regarding the transaction will be contained in an information circular (“Information Circular”) that Gennum will prepare and mail to its shareholders in connection with the Gennum Meeting, with closing expected to occur as soon as practicable after the Gennum Meeting and receipt of final order from the Ontario Superior Court of Justice. Gennum Shareholders are urged to read the Information Circular once it becomes available, as it will contain important information concerning the proposed transaction.

In connection with the proposed transaction, Jefferies & Company, Inc. is acting as exclusive financial advisor to Semtech, Norton Rose Canada LLP is its Canadian legal counsel and O’Melveny & Myers, LLP is its U.S. legal counsel. Canaccord Genuity Corp. is acting as exclusive financial advisor to Gennum, Blake, Cassels & Graydon LLP is its Canadian legal counsel and Skadden, Arps, Slate, Meagher & Flom LLP is its U.S. legal counsel.

Friday, January 6, 2012

Activist Starboard launches attack on Tessera

SAN JOSE, Calif.--(BUSINESS WIRE)-- Tessera Technologies, Inc. (Nasdaq: TSRA) (the "Company") announced it has received a letter from Starboard Value and Opportunity Master Fund Ltd and its affiliates and director nominees (together "Starboard").

In the letter Starboard stated it holds less than 1.3% of the shares outstanding and intends to nominate candidates to fill half of the positions on the Company's Board of Directors. According to the letter, Starboard holds 622,916 shares of the Company, 621,916 of which it purchased in December 2011, and intends to nominate Messrs. Maury Austin, Peter A. Feld and Jeffery S. McCreary for election at the 2012 Annual Meeting of the Stockholders of Tessera Technologies, Inc. According to public filings, Starboard owns approximately 9.9% of MIPS Technologies, Inc., where Mr. Austin is the former CFO and Mr. McCreary is a board member.

The Company issued the following statement:

"The Board of Directors of the Company is single-mindedly focused on enhancing value for all stockholders. Since installing Bob Young as CEO a little more than six months ago, the Board has taken decisive steps to chart a new path for the Company that will capitalize on the significant growth opportunities that the Company uniquely enjoys. Our Micro-electronics business continues to generate strong cash flow that we are prudently re-investing in new packaging solutions and in patented technology in adjacent and other vertical markets. Our Digital Optics business is now pursuing a large, transformational market opportunity that will produce measurable results in the next twelve months, exploiting technology that is proven and disruptive, with a clear path to commercialization. The Company has the right Board and management team in place to execute on these opportunities and to deliver value for the Company's stockholders.

We welcome an open and active dialogue with our stockholders. We regret that Starboard did not see fit to engage in dialogue with us prior to delivering its letter, but we look forward to the opportunity to engage in discussions with Starboard and all of our stockholders in the coming weeks. We know our stockholders need to understand the strategic plan and the concrete steps the Company is taking to execute on it. We are confident that as our stockholders understand the plan and the pace on which we are moving to realize it, our stockholders will be as excited about the Company's prospects as we are."

Thursday, January 5, 2012

Trident Microsystems files for Bankruptcy

SUNNYVALE, Calif., Jan. 4, 2012 (GLOBE NEWSWIRE) -- Trident Microsystems, Inc. ("Trident" or "the Company") today announced that the Company and its Cayman subsidiary, Trident Microsystems (Far East) Ltd. have filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Trident will shortly file for protection in the Cayman Islands as well.

As part of the filing, Trident has filed a motion to approve the bid procedures for the sale of its Set-Top-Box business operations to Entropic Communications, Inc. ("Entropic") pursuant to the asset purchase agreement included with the motion. Trident intends to continue to operate all of its business lines in the ordinary course and has ample liquidity to do so, while it completes the Bankruptcy approval process regarding the sale of its Set-Top-Box business to Entropic and explores strategic alternatives for its remaining business units.

"Trident, like many of its competitors, has been undergoing rapid changes which have hindered its ability to operate profitably," stated Dr. Bami Bastani, chief executive officer of Trident. "A combination of increased pricing pressures in our industry, lower demand in consumer electronics, and slower than anticipated new product adoption has contributed to increased operating losses, a deterioration in liquidity and an erosion in equity values for Trident." Trident recently announced that it was exploring a number of strategic alternatives, and this process led to the contemplated sale of the Set-Top-Box business to Entropic (Nasdaq:ENTR), a leading provider of silicon and software solutions for the home entertainment market. Bastani added that "we are extremely pleased with the opportunity that Entropic provides for not only our Set-Top-Box business, but also our key suppliers and vendors, customers and our dedicated employees throughout the world." This transaction has been approved by the Boards of Directors of Trident and Entropic. The sale of the Set-Top-Box business to Entropic will be subject to a bidding process and approval by the Bankruptcy Court and the Cayman court, and it is expected that the sale will close in late February, 2012.

Trident also announced that it has entered into a license agreement with RDA Technologies, Ltd., pursuant to which it granted a non exclusive license to its SX-5 SOC product for the television market. Under the license agreement, Trident has received an upfront fee of $7.5 million and expects to receive an additional $8.5 million in the near term. As a result of cost cutting efforts, the RDA license agreement, and the receipt of funds from the sale of its facility in China, the Company believes its cash balance as of December 31, 2011 provides adequate liquidity to continue to meet customer and vendor requirements while the marketing efforts for its key assets continues.

During the interim, Trident expects that Chapter 11 protection will enable the Company to conduct its business operations in the ordinary course. To that end, the Company is seeking approval from the court for a variety of First Day and other initial motions, including requests to make wage and benefit payments to employees and continuation of the Company's global cash management system.

None of Trident's other operating subsidiaries are subject to the Chapter 11 proceedings, and they will continue to operate in the ordinary course of their businesses.

Additional information on the filing can be found at the Claims Agent's website

Entropic Bids for Trident's Set-Top Box Business

SAN DIEGO, Jan. 4, 2012 (GLOBE NEWSWIRE) -- Entropic Communications, Inc. (Nasdaq:ENTR), a leading provider of silicon and software solutions to enable connected home entertainment, today announced it has filed an asset purchase agreement as "stalking horse" bidder to purchase certain assets of Trident Microsystems' (Nasdaq:TRID) set-top box (STB) system on a chip (SoC) business in connection with Trident's Chapter 11 bankruptcy filing on January 4, 2012. The planned USD$55 million acquisition would bring together two highly complementary technologies, product lines, and teams.

"The acquisition of Trident Microsystems' set-top box business provides an important strategic opportunity for Entropic by enabling us to combine our best-in-class MoCA solutions, including MoCA2, with Trident's system on a chip (SoC) business to deliver a complete system solution to the world's premier cable, telco and satellite service providers, while expanding our total addressable market over the next several years," said Patrick Henry, president and CEO, Entropic. "Additionally, this acquisition would provide us with key talented resources, increased scale, valuable intellectual property, broader customer relationships and an expanded worldwide footprint to ensure sustained success in our core markets and accelerated penetration in the global SoC markets."

"Trident's set-top box SoC business is highly complementary to Entropic's leading MoCA solutions product line," said Bami Bastani, president and CEO, Trident. "Our mutual culture of technical innovation and execution excellence, along with our multi-year history of product collaboration, should allow a seamless hand-off for our OEM customers and service providers."

As part of the intended acquisition, Entropic would obtain Trident's complete STB product portfolio, comprised of a comprehensive suite of digital STB components and system solutions for worldwide satellite, terrestrial, cable and IPTV networks. The Company's STB product offering includes STB SoCs, DOCSIS® modems, interface devices and media processors. In addition, Trident's STB product line-up features a range of ARM Cortex-A9 based SoCs that have been optimized for leading Web technologies such as Adobe® Flash, HTML5 and OpenGLES2.0 gaming as well as cost optimized standard definition and high definition Digital Terminal Adapter (SD/HD-DTA) devices to meet the needs of cable/multiple system operator (MSO) analog reclamation initiatives.

Entropic intends to invest in service and support for the existing Trident STB customer base, as well as advance Trident's STB product line by continuing to invest in its development -- leveraging mutual strengths of both companies' technologies to provide customers with next generation, integrated Multimedia over Coax (MoCA®) based chip-set solutions.

The assets to be acquired under the agreement include Trident's specific STB products, patents and other intellectual property, certain tangible assets and inventory. To complement its products, Trident also offers complete reference designs that are bundled with a range of operating systems, middleware, drivers and development tools – all of which would fall under the Entropic brand upon completion of the sale to Entropic.

Entropic would plan to hire approximately 385 Trident employees located primarily in China, India, the United Kingdom, Taiwan, Korea and the United States. Entropic would also acquire facilities in Austin, Texas, Belfast, Northern Ireland and Hyderabad, India and would use portions of Trident's facilities in China, Taiwan and Korea under a facilities use agreement while Entropic assesses its facilities requirements.

The purchase price is USD$55 million in cash, plus assumption of specified liabilities upon the closing of the transaction, subject to adjustment for closing working capital balances and other matters, as set forth in the asset purchase agreement. Trident has selected Entropic as its stalking horse bidder with customary protections, subject to Bankruptcy Court approval. The asset purchase agreement to be entered between Trident and Entropic has been filed with the United States Bankruptcy Court for the District of Delaware along with Trident's motion seeking the establishment of bidding procedures for an auction that allows other qualified bidders to submit higher or otherwise better offers, as required under Section 363 of the U.S. Bankruptcy Code. Entropic expects that hearings before those courts to approve bidding procedures, break-up fees and expense reimbursement will be held within the next two weeks, followed by an auction, with hearings for approval of the ultimate sale to be held thereafter. Consummation of the transaction, which is expected to occur in the first quarter of 2012, remains subject to higher or otherwise better offers, approval by the United States Bankruptcy Court and customary closing conditions.

Mindspeed Technologies to Acquire Picochip

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--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.

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.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.

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.

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 and Twitter: @picochip_femto.