[Techtaffy Newsdesk]
Mindspeed Technologies, a supplier of semiconductor solutions for network infrastructure applications, has signed a definitive agreement to acquire U.K.-based Picochip, a 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.
Mindspeed will pay cash of $27.5 million and approximately 5.19 million in new shares of Mindspeed common stock, amounting to approximately 15 per cent 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 payable in the first calendar quarter of 2013, whereby the purchase price can increase by up to $25 million, contingent on the achievement of certain milestones.
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 management estimates the total addressable market for the combined entity will grow to $3.0 billion by 2016.
Raymond James & Associates is acting as Mindspeed’s financial advisor, and Wilson Sonsini Goodrich & Rosati is serving as Mindspeed’s legal advisor. Barclays Capital is acting as Picochip’s financial advisor and Fenwick & West is serving as Picochip’s legal advisor.