November 30, 2011 / 3:34 PM / 7 years ago

Skyworks snaps up Advanced Analogic at lower price

(Reuters) - Skyworks Solutions said it will buy smaller rival Advanced Analogic Technologies for $5.80 a share in cash, a price lower than its original offer, ending a months-long standoff between the chipmakers.

Skyworks had in May agreed to buy AATI for $258.6 million, or $6.05 a share, in cash and stock but had threatened to walk in September saying it was not given access to certain financial information.

Last week, Reuters reported quoting sources that Skyworks’ tough posturing was just a ploy to grab Advanced Analogic at a lower price as the economy had turned tougher since the deal was signed.

The latest offer, which values Advanced Analogic at about $257 million, is at a premium of 34 percent to the stock’s close on Tuesday on Nasdaq.

Advanced Analogic shares, which had lost more than a quarter of their value since September when Skyworks sought to end the deal, were trading up at $5.75. Skyworks shares were up 11 percent as investors were relieved that the company had avoided a costly legal battle.

Skyworks, which makes radio frequency chips that allow cellphones make and receive calls, has been coveting AATI to get access to its power management technology, which helps extend battery life in smartphones and tablets.

The deal will help Woburn, Massachusetts-based Skyworks add LG Corp and Samsung Electronics Co to its existing customer base, which includes HTC Corp, Nokia and Apple Inc.

However, analysts said the deal could put Skyworks’ margins under pressure as the newly acquired business is seeing macro-economic headwinds.

“Skyworks is getting a product that they wanted and Advanced Analogic is getting a partner and parent that can help them scale and grow, as it is too small to survive long term. Its a good solution all around,” said Stephen Raneri, portfolio manager at LionEye Capital Management and an investor in Advanced Analogic.

Skyworks expects the deal, which follows its $275 million buy of privately held fabless semiconductor company SiGe Semiconductor earlier this year, to add to its 2012 earnings.

“It would depend on how quickly Skyworks could reduce the costs for Advanced Analogic, given that it is not effectively that profitable a business,” Pacific Crest analyst Nathan Johnsen told Reuters.

As part of the deal, the companies also agreed to voluntarily withdraw the claims against each other in a Delaware court.

Skyworks intends to start a tender offer within seven business days and will finance the offer with cash on hand, the two companies said in a joint statement.

Reporting by Rachana Khanzode in Bangalore; Editing by Hezron Selvi, Saumyadeb Chakrabarty

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