Analog integrated circuits (ICs) maker
Maxim Integrated Products Inc.
) announced a definitive agreement to acquire a power management
Volterra Semiconductor Corp.
) for a total value of $605 million, including Volterra's cash
position of $155 million.
Maxim will pay $23 per share for Volterra, which represents a
55% premium to the latter's closing share price on Aug 14, 2013.
After the announcement, shares of Volterra and Maxim jumped 54.8%
and 3.41%, respectively, over yesterday's closing price.The deal
will be completed in early December subject to pending regulatory
Calif.-based Volterradevelops low-voltage power-management
chips for the computing, storage, networking and consumer
markets.For 2012, Volterra posted revenues of $168 million and
net income of $22.8 million, representing year-over-year
increasesof 11% and 8%, respectively.
Maximstated that the acquisition will strengthen its position
in the enterprise and communications markets. The acquisition
will also allow Maxim to develop and offer high-current power
management solutions in the industry.
Currently, the demand for chips that provide greater
operational efficiency and consume less power is rising due to
increased adoption of mobile devices. Infact, a Databeans report
states that power management is the largest and fastest-growing
product segment in the analog market.
Also, a research report from HIS states that the power
management IC market will grow 7.6% to $32.2 billion in 2013. The
growth will be driven by strong demand for portable handheld
devices, including mobile phones, consumer electronics equipment,
hybrid and electrical vehicles, the smart grid and medical
As per a forecast by TechNavio, the global smartphone market
will increase at a compound annual growth rate (CAGR) of 10%
through 2016. Another research firm IDC forecasts that total
smartphone shipments will reach 1.5 billion units in 2017,
posting a CAGR of 16% over the next five years, which represents
significant growth opportunity for Maxim. The acquisition
therefore makes sense for Maxim. The company can expand in the
fast-growing low-energy chip market and concentrate more on the
smartphone market, which is expecting robust growth in the long
Maxim has already witnessed strength in the smartphone market,
where it has secured a number of wins. Its chips are already used
in Samsung Electronics Co Ltd's high-end Galaxy smartphones such
as S4 and Note 2. Also, Maxim is expanding its mobile solutions
toward mid-range smartphones as high-end smartphones are
witnessing a slowdown globally.
The Volterra acquisition will help Maxim to further increase
its market share in the smartphone market, which requiresmore of
energy saving chips. We believe that the acquisition will broaden
Maxim's customer base, providing the company with a significant
Maxim has a well-diversified business. The company is
continuously increasing its focus on the faster-growing consumer
and computing end markets. However, in the last-reported fourth
quarter, Maxim's earnings of 44 cents missed the Zacks Consensus
Estimate by 3 cents or 6.4%. The company's revenues of $608.2
million wereup 0.5% both sequentially and year over year.
Maxim carries a Zacks Rank #4 (Sell). Stocks that are
performing well at current levels include
), bothcarrying a Zacks Rank #1 (Strong Buy).
MAXIM INTG PDTS (MXIM): Free Stock Analysis
SUPERTEX INC (SUPX): Free Stock Analysis
SYNTEL INC (SYNT): Free Stock Analysis Report
VOLTERRA SEMI (VLTR): Free Stock Analysis
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