SMSC to acquire Conexant

HAUPPAUGE & NEWPORT BEACH, USA: SMSC, a leading semiconductor company providing Smart Mixed-Signal Connectivity solutions, and Conexant Systems Inc., a leading supplier of innovative semiconductor solutions for imaging, audio, embedded modem, and video surveillance applications, announced the signing of a definitive agreement.

Under the agreement, SMSC will purchase all of the outstanding shares of Conexant in a stock and cash transaction valued at approximately $284 million including the assumption of Conexant’s net debt. The transaction has been approved by the boards of directors of both companies.

Highlights
* Complementary connectivity product portfolios to target more expansive set of computing, consumer, industrial and automotive applications.
* Serves key customers with more complete product solutions.
* Creates a stronger analog/mixed-signal R&D team with over 900 engineers globally.
* Combined company has the scale and resources to enhance SMSC’s financial model with a combined trailing twelve month revenue of approximately $632 million.
* Anticipated annualized pre-tax cost synergies of $8 to $10 million by the end of SMSC’s fourth quarter of fiscal 2012.
* Acquisition expected to be accretive to non-GAAP gross margins, non-GAAP operating margins and non-GAAP earnings per share immediately upon closing.

The combination of Conexant’s imaging, audio, embedded modem and video products with SMSC’s broad connectivity solutions targeting the computing, consumer, industrial and automotive markets provides for a highly complementary merger of talent and technology. Headquartered in Newport Beach, California, Conexant has approximately 600 employees worldwide, including over 230 in Asia.

“We believe that combining the growth potential of Conexant and SMSC will allow us to leverage complementary technology and engineering resources to provide our customers with expanded solutions in connectivity and content,” said Christine King, president and CEO of SMSC.

“We plan to focus our resources on the areas of highest return and believe that our respective sales and supply chain relationships will help create a platform to grow our businesses. We expect the acquisition will be accretive to non-GAAP EPS immediately upon close. In addition, we expect to capture significant operating efficiencies that will position us to increase earnings growth. SMSC’s larger scale should position us to increase our R&D productivity and drive profitability and shareholder value.”

“In our industry, size and scope provide a significant advantage with customers and suppliers," said Scott Mercer, Conexant's chairman and CEO. "SMSC and Conexant share similar core competencies in analog and mixed-signal design, possess complementary product portfolios, and count many customers in common. By joining forces, we get the opportunity to take advantage of economies of scale and drive profitable growth. I am convinced that combining our companies will best serve the interests of Conexant stockholders, customers, and employees moving forward."