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Anadigics Inks Merger Agreement to Fuel Top-Line Growth

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On Nov 18, Zacks Investment Research updated the research report on semiconductor manufacturer Anadigics, Inc.ANAD .

Anadigics recently declared its third-quarter 2015 results, wherein it continued to report in the red. However, non-GAAP net loss of 6 cents per share was narrower than the loss of 7 cents per share in the year-ago quarter. The adjusted loss (with employee stock option adjustments) of 7 cents per share was also narrower than the Zacks Consensus Estimate by a penny.

Third-quarter 2015 revenues of $12.1 million were down 36% year over year due to a decline in demand for legacy mobile business, although it matched the Zacks Consensus Estimate.

Anadigics has been incurring losses over the last few quarters and its revenue has steadily deteriorated. Consequently, the company initiated corporate restructuring activities to reduce operating costs and better align its resources with the evolving demand for infrastructure-based products. The semiconductor chip industry is also witnessing sluggish growth despite healthy strides in the digital and telecommunications markets.

In order to accelerate innovation and product development to fuel top-line growth in key target markets, Anadigics has inked a definitive merger agreement with GaAs Labs, LLC - an investment firm specializing in communications, semiconductor and related markets. The merger agreement is probably an attempt to stem further losses and improve revenues. Synergistic benefits from the merger are likely to boost profitability through economies of scale and mutual sharing of manufacturing expertise, research and development costs and adjustment of staffing expenses.

Under the terms of the merger agreement, GaAs Labs will acquire Anadigics for 35 cents per share, representing a premium of 38.2% based on the closing price as on Nov 11, 2015. The transaction is expected to be completed by this December or January next year, subject to the fulfillment of mandatory closing conditions and regulatory approvals. Post acquisition, Anadigics will operate as a wholly owned subsidiary of GaAs Labs.

Anadigics is expected to leverage GaAs Labs' industry knowledge and proven track record to offer its customers a broader portfolio of innovative and valuable product offerings. On the other hand, with Anadigics on board, GaAs Labs is expected to tap new markets and drive its growth objective.

Anadigics presently has a Zacks Rank #2 (Buy). Some of the other better-ranked players in the industry include CEVA Inc. CEVA , Mellanox Technologies, Ltd. MLNX and Integrated Device Technology, Inc. IDTI , each carrying a Zacks Rank #1 (Strong Buy).

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ANADIGICS CORP (ANAD): Free Stock Analysis Report

MELLANOX TECH (MLNX): Free Stock Analysis Report

INTEGR DEVICE (IDTI): Free Stock Analysis Report

CEVA INC (CEVA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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