Entering text into the input field will update the search result below

Dialog Semiconductor Gets Rewarded For Walking Away From Synaptics

Stephen Simpson profile picture
Stephen Simpson


  • Dialog and Synaptics terminate their merger discussions, and investors breathe a sigh of relief that Dialog didn't overpay.
  • Dialog pre-announced a stronger than expected second quarter, but a lot rides on how quickly it can ramp its non-Apple/non-smartphone operations.
  • I believe another M&A bid (for a different) company is quite possible; there's value here if the Apple decline is controlled and the non-Apple businesses ramp, but it's high-risk.

Battered power management semiconductor company Dialog Semiconductor (OTCPK:DLGNF) (DLGS.XE) has done a little better since my last update on the company, as the market has reacted positively to a favorable second quarter pre-announcement, and now, the announcement that it has terminated merger discussions with Synaptics (SYNA).

Overpaying for Synaptics wasn’t going to help Dialog, but Dialog does still need a lot of self-help. The company is looking at a steep downward turn in power management integrated circuit (or PMIC) revenue from Apple (AAPL), and the company is a long way from solid traction in markets outside mobile (and/or with customers other than Apple). Although the shares no longer trade at a discount to zero value in the mobile business, there could still be upside if Dialog can grow its rapid charging, connectivity, and auto/industrial businesses and/or find a new M&A dance partner.

So Long Synaptics

Dialog announced late on Tuesday that it had terminated merger discussions with Synaptics. I had my questions about this deal when the two companies first confirmed discussions – although Synaptics offered meaningful cost-reduction synergy potential and some operational synergy potential (as Synaptics’ interface products consume a lot of power), Dialog’s dicey M&A history and Synaptics’ own transitional issues (steadily declining quarterly revenues) made it a curious choice. Synaptics did note in its press release on the termination that it now expected earnings at the high end of its guidance range, though the high end of its revenue range would still imply a roughly 4% year-over-year decline.

Neither company commented on the reason why a deal couldn’t be struck. I doubt I’m making any leap of faith here in assuming price had a lot to do with it, particularly as a deal for Synaptics was going to far exceed Dialog’s net cash on hand, and Synaptics might have rightly

This article was written by

Stephen Simpson profile picture
Stephen Simpson is a freelance financial writer and investor. Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds); now a semi-retired raccoon rancher. That last part isn't entirely true. Probably.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.