Power management chip designer Integrated Memory Logic Ltd (IML, 安恩科技) yesterday said its board of directors had accepted as reasonable a NT$6.8 billion (US$223 million) offer from US firm Exar Corp, adding that the deal would enhance its global competitiveness.
Analysts said the deal indicates more potential takeover bids ahead for financially sound fabless integrated circuit companies, such as IML, as the semiconductor industry begins consolidating.
With a paid-in capital of NT$742.34 million, Cayman Islands-registered IML is a supplier of analog mixed-signal solutions for flat-panel displays, while Fremont, California-based Exar provides analog mixed-signal, video and data management solutions.
Founded in 1996 and headquartered in Campbell, California, the Taipei-listed IML said in a filing with the Taiwan Stock Exchange that it would be acquired by Image Sub Ltd, a wholly owned subsidiary of Exar, at NT$91 per share, after the two sides signed a definitive agreement on Saturday.
The offer represents a premium of 34.62 percent from IML’s closing share price of NT$67.6 on Friday last week.
The stock ended up in Taipei trading yesterday by the maximum daily limit at NT$72.3 on the Taiwan Stock Exchange, while the broader market closed 0.41 percent higher.
“Small-cap and niche fabless companies with hefty cash balances are often ideal targets for M&A and/or LBOs and MBOs,” Yuanta Securities Co (元大證券) analyst George Chang (張家麒) said in a note yesterday, referring to merger and acquisitions, leveraged buyouts and management buyouts.
IML made NT$429.67 million in net profit last year, or NT$5.46 in earnings per share, with revenue of NT$1.99 billion, which was lower than 2012, when it posted net profit of NT$837.51 million or NT$10.50 per share on revenue of NT$2.89 billion.
Yet the company has a handsome cash balance of more than NT$50 per share, Chang said.
“As the semiconductor industry moves toward a trend where ‘the big keep getting bigger’ and China develops its own semiconductor supply chain, there will be more consolidations ahead,” he said.
Some other analog IC companies with rich cash positions include Capella Microsystems (Taiwan) Inc (凌耀科技), Global Mixed-mode Technology Inc (致新科技), Leadtrend Technology Corp (通嘉科技) and Macroblock Inc (聚積科技), according to Yuanta.
IML said the deal is expected to close on Sept. 19, in which it becomes the surviving entity after the acquisition and a wholly owned subsidiary of Exar.
The company said it would then apply to delist itself from the Taiwan Stock Exchange, making it the second group of foreign companies trading their shares under the “F-share” group to delist from the main bourse after MStar Semiconductor Inc (晨星半導體) merged with MediaTek Inc (聯發科) on Feb. 1.
Exar president and CEO Louis DiNardo said in a press release that the acquisition of IML would add more diversified analog mixed-signal and power management products to its product portfolio.
“The company [IML] serves customers in South Korea, Taiwan, Japan and China, which will enhance Exar’s existing presence in these markets,” DiNardo added.
IML counts among its customers global flat-panel makers, such as Samsung Electronics Co, LG Display Co, AU Optronics Corp (AUO, 友達光電) and some Chinese names.