Yuanxi Zhang
Long/short equity, value, special situations

Montage Technology: An Attractive Deal With 22.8% Annualized Return

Recommendation: Long Montage Technology at $21.47

Target Price: $22.60

Thesis

After receiving the shareholder approval, the acquisition of Montage Technology (NASDAQ:MONT) only requires approvals from regulatory authorities in China before it could close. Based on our conversation with market participants, regulatory authorities are unlikely to block the deal given the supportive policies in the Chinese semiconductor industry. While the exact timing of the regulatory approvals is difficult to predict, the review timeline will be generally shorter than the timeline of Spreadtrum Communications (NASDAQ:SPRD). Since the deal is likely to close in less than 3 months, we recommend a long position.

Basic Information of the Merger

On June 11th, 2014, Montage Technology announced that it has reached...

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