MaxLinear: Back On Track
Darspal S Mann
Darspal S Mann
Feb. 3, 2015, 4:45 PM
- Broadband/consumer electronics RF chipmaker MaxLinear (NYSE:MXL) is acquiring satellite/home networking chipmaker Entropic (NASDAQ:ENTR) for $287M ($181M net of cash). The price is equal to $3.01/share, representing an 11% premium to Entropic's Tuesday close.
- Entropic shareholders will get $1.20/share in cash and 0.22 MaxLinear shares for each share they own. They'll own 35% of the post-merger company.
- MaxLinear: "The acquisition will add significant scale to MaxLinear's analog/mixed-signal business, expanding its addressable market and enhancing the strategic value of MaxLinear's offerings ... MaxLinear sees immediate cross-selling opportunities and longer-term platform integration opportunities with Entropic's leading MoCA [home networking] technology."
- The company also highlights Entropic's portfolio of 1.5K patents and patent applications. $20M/year in cost synergies are expected in year 1; the deal is expected to close in Q2.
- Separately, MaxLinear is affirming its Q4 revenue guidance (earnings arrive on Feb. 9), and guiding for FQ1 revenue of $34M-$35M, above a $33.7M consensus. Entropic, which has been struggling in recent quarters, has just posted a slight Q4 beat and guided for Q1 revenue of $45M-$46M, above a $40M consensus.
- MXL +3.6% AH. The chip industry has been rapidly consolidating over the last 18 months.