SMSC set to buy Conexant for $284 million

LONDON -- Acquisitive mixed-signal chipmaker Standard Microsystems Corp. has agreed to buy Conexant Systems Inc. (Newport Beach, Calif.) in a stock and cash transaction valued at $284 million including the assumption of Conexant's net debt.

Conexant, the remainder of the spin-off of Rockwell's semiconductor interests in January 1999, is a vendor of imaging, video, audio and embedded modem chips. The transaction has been approved by the boards of directors of both companies.

SMSC (Hauppauge, New York) said that the two companies' product lines are complementary and together range from computing, through consumer, industrial and automotive applications. The combined revenue of the companies over the last 12 months is approximately $632 million. Conexant has approximately 600 employees worldwide, including over 230 in Asia.

"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," said Christine King, president and CEO of SMSC, in a statement. "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, in the same statement. "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."

Sailesh Chittipeddi, currently president and COO at Conexant, will join SMSC upon close of the acquisition as executive vice president, reporting to Christine King. His responsibilities will include all product lines and global marketing and engineering functions for SMSC.

Under the terms of the agreement, for each share of Conexant that they own, Conexant stockholders will receive approximately $2.25 consisting of half in cash and half in SMSC stock.

The total cash consideration to be paid in the transaction is approximately $98 million and the total number of shares of SMSC common stock to be issued is approximately 2.9 to 3.6 million. The transaction is expected to close in the first half of calendar 2011 subject to the satisfaction of regulatory requirements, approval by Conexant shareholders and other customary closing conditions.


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