CSR to Buy Zoran in $679M Deal
British chipmaker CSR has agreed to buy U.S.-listed Zoran Corporation (NASDAQ:ZRAN) in an all-share deal to add imaging and video to its wi-fi, bluetooth and GPS location technologies.
CSR's Chief Executive Joep van Beurden said the $679 million deal would enable CSR to target the growing number of devices that combine imaging and video with wireless and location services.
"The combined entity is going to be in a position to be very relevant to camera manufacturers," he said in an interview on Monday. "The same is true for digital televisions, in cars, in gaming and in handsets."
The combined group, whose customers include Sony (6758.T) and Samsung (005930.KS), will work to optimize their technologies before creating single chips with multiple services in about 18-24 months, he said.
"You will absolutely see combinations of imaging, video technology, and connectivity in one product," he said.
Shareholders in Zoran, which also has operations in Israel, will receive 1.85 CSR shares for each Zoran share, implying a 40 percent premium to Zoran's closing price on Friday.Zoran had $260 million of cash, CSR said, of which it would return up to $240 million to shareholders in a share buyback.
Van Beurden said the combined group had pro-forma revenue of about $1.25 billion, which gave it the scale to take on larger rivals in buying wafers and in winning deals from electronics companies.
Cost savings would be $50 million a year by 2012, by which time the deal would boost earnings by double digits, he said.
The market was cautious on the deal, marking shares in CSR 6% lower at 408.6 pence by 0955 GMT. The stock has risen 34% in the last three months.
Analysts at Numis, however, gave an initial welcome to the transaction, saying it had strong potential.
"We believe the transaction provides attractive diversification and scale and a strong opportunity for CSR to become a leading provider of chips which enable the digital connected consumer," they said.
"lt has many of the hallmarks of CSR's acquisition of SiRF, a deal which has been very successful."
CSR, which competes with Broadcom (NASDAQ:BRCM) and Qualcomm (NASDAQ:QCOM), added GPS location services to its bluetooth and wi-fi technologies with the acquisition of SiRF in 2009.
The Cambridge-based firm, however, has lost ground in the mobile phone sector in the last year because of its relative weakness in smartphones.