Semiconductor company Silicon Image Inc, whose technology helps streams video between consumer electronic devices, is exploring strategic alternatives, including selling itself, according to people familiar with the matter.
The Sunnyvale, California-based company, which is under activist pressure from hedge fund firm Engaged Capital LLC, is exploring its options with the help of investment bank Barclays Plc (NYSE:BCS), the two people said this week.
Shares of Silicon Image jumped as much as 11 percent on the news on Friday and were trading up 6 percent at $6.18 in afternoon trading in New York, giving the company an equity valuation of close to $500 million.
The sources declined to speak on the record because the matter is confidential. A Silicon Image representative did not immediately respond to a request for comment, while a Barclays spokesman declined to comment.
Founded in 1995, Silicon Image designs chips to connect smartphones and tablets to televisions and digital projectors. Its mobile business has been under pressure as smart phone makers have trimmed their forecasts.
Engaged Capital sent a letter to the company's board on Dec. 22 urging the company to repurchase stock. The activist firm said Silicon Image had bloated cost structure and has failed to realize the full value of its HDMI consumer electronics business and wireless assets. Silicon Image said on Jan. 5 that it was restructuring its business to focus on mobile revenue, cutting 45 jobs and reducing expenses.
In October, Silicon Image announced plans to create two subsidiaries, one containing its valuable wireless assets and intellectual property, and the other for its services business.
(Reporting by Liana B. Baker and Soyoung Kim in New York; Editing by Bernard Orr)