LONDON – Spreadtrum Communications Inc. has announced it has signed a definitive agreement to acquire Telegent Systems Inc., a developer of software and silicon for the reception of live broadcast television signals.
Spreadtrum (Shanghai, China), a fabless developer of baseband and RF chips for the wireless communications market, did not indicate how much it would pay to acquire Telegent. It did say that it does not expect there will be a "significant impact to either its cash position or operating expenses" as a result of the transaction. Spreadtrum said that following the acquisition, it will explore the possibilities of integrating Telegent TV technology with its own baseband ICs to deliver further performance and cost benefits.
The statement of "No significant impact" would suggest that Spreadtrum is paying something similar to the cash pile that Telegent has on-hand to acquire the company, and effectively getting other assets such as patents and product IP at a bargain price.
Under the terms of the deal, approximately twenty hardware and software engineers from Telegent's Shanghai office will join Spreadtrum. The transaction has been approved by the Spreadtrum and Telegent boards of directors but has yet to be approved by Telegent stockholders, which are mainly a set of venture capital companies that have invested in excess of $35 million in Telegent.
"Broadcast mobile TV is a popular feature with consumers in emerging markets, which is a target market segment for Spreadtrum and one in which we are experiencing rapid growth," said Leo Li, president and chief executive officer of Spreadtrum, in a statement. "The acquisition of Telegent enhances the value proposition we can deliver to the supply chain serving this market segment from handset manufacturer to end market brand and accelerates our international footprint."
Telegent (Sunnyvale, Calif.) founded in 2004 had a spectacular rise in the middle-part of the decade and similarly precipitous fall after it pulled a planned initial public offering of shares in May 2010. In June 2010 the company appointed Ford Tamer, a veteran with experience at Broadcom, and it would seem that he was put in place to find a strategic solution for the company and its investors.
The company was already moving from an analog TV to mixed analog and digital TV strategy but was under intense price pressure from rivals such as MediaTek, RDA Microelectronics and Newport Media, according to sources (see The cause of Telegent’s spectacular fall: China dunnit). Although Telegent's business model would appear to have broken, the company is still thought to have a cash pile, which could be as high as $60 million or $70 million, left over from the heady days when it was the market leader in mobile TV chips.
Spreadtrum was rumored to have been in negotiations with Telegent but it was thought those talks had broken down, possibly over the price. It now appears that Spreadtrum is picking up a local design group in Shanghai, a portfolio of more than 70 patents granted or pending and a product line covering analog and digital mobile TV ICs, antenna technology and player and entertainment services software. Telegent's recently introduced product, the TLG12xx series includes integrated internal antenna technology.
Telegent's investors include Index Ventures, New Enterprise Associates, Northern Light Venture Capital, Walden International, Stanford University and the University of California at Berkeley.
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The related links below chart the recent progress of Telegent in reverse chronological order:
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