LONDON NXP Semiconductors and DSP Group, Inc. are combining their cordless and VoIP terminals businesses in a deal valued at up to $345 million and which sees NXP taking a 12 percent stake of the DSP Group. The Dutch company says the proceeds from the sale could be used for acquisitions.
The deal doubles the size of the DSP Group (Santa Clara, Calif. and Herzlia, Israel), a specialist developer of wireless communications chips, who is paying $270 million, consisting of $200 million in cash and $70 million in new shares. The cordless and VoIP terminals chip activities of NXP (Eindhoven, the Netherlands) is currently part of the company's Mobile and Personal Business Unit.
DSP Group could also pay an additional $75 million in cash depending on the future performance of the combined operation. The fabless semiconductor group says the deal is expected to be positive to earnings per share this year and beyond, excluding transaction expenses, and that it is likely to close in the third quarter of 2007, subject to closing conditions, including regulatory approvals.
NXP's cordless and VoIP terminals business generated approximately $220 million revenue in 2006 and comprises some 200 staff based at locations around the world. The companies said most NXP staff in the business unit will transfer to the DSP Group but would not go into further detail about staffing levels.
The unit develops and makes RF chipsets, basebands, software and system solutions for DECT, DECT 6.0, WDCT 2.4, 5.8, Analog 900, 2.4, 5.8, VoIP/MTA, USB Softphones, and VoIP Gateways.
"Combining our operations creates a powerful force that will put the DSP Group firmly into a leadership position in terms of scale and technology. We will have a much stronger European presence to help us accelerate the penetration of VoIP and DECT technologies in the region and will have a more powerful research and development engine that will benefit from the advanced NXP process technologies," commented Eli Ayalon Chairman and CEO, DSP Group in a statement Monday (May 14).
Ayalon added NXP will get a seat on the Board of Directors of DSP Group for its strategic investment and will not transfer its shares of DSP Group common stock for at least two years following the closing of the deal.
Frans van Houten, NXP President and CEO, said the deal will allow the spin-off from Philips Semiconductors to focus on six chosen markets: cellular phones, personal entertainment, home electronics, automotive, identification and multi market semiconductors. "Additionally, with the proceeds we will be able to strengthen these segments, for example with future acquisitions."
The company's last major acquisition was in February this year when it said it would pay $285 million in cash for Silicon Laboratories' single-chip phone and power amplifier product lines to beef up its cellular business unit.