NXP, DSP Group create cordless, VoIP biz in $345M deal

NXP, DSP Group create cordless, VoIP biz in $345M deal
By Ann Steffora Mutschler, Senior Editor -- Electronic News, 5/14/2007
With the aim of creating a market leader in the cordless and voice over Internet protocol (VoIP) residential telephony market, Eindhoven, Netherlands-based NXP Semiconductors and Santa Clara, Calif.-based fabless semiconductor supplier DSP Group Inc. said today they are combining their cordless and VoIP terminals businesses within DSP Group in a transaction expected to be as much as $345 million and giving NXP a 12 percent share in DSP Group.
DSP Group said it will pay $270 million to NXP for the Philips spin-off’s cordless and VoIP terminals business, consisting of $200 million in cash and $70 million in the issuance of DSP Group’s common stock on the basis of the average closing price per share for DSP Group’s common stock on NASDAQ Global Market during the twenty business days ending on the fifth business day prior to the closing of the transaction,
NXP’s cordless and VoIP business is currently part of the company’s mobile and personal business unit and is a supplier of RF chipsets, basebands, software and system solutions for DECT, DECT 6.0, WDCT 2.4, 5.8, Analog 900, 2.4, 5.8, VoIP/MTA, USB Softphones, and VoIP Gateways. In 2006, NXP said the group sold approximately 300 million products in digital cordless.
DSP Group also said it will make a contingent cash payment of up to $75 million payable based on future revenue performance.
The transaction is expected to be positive to earnings per share of DSP Group this year and beyond, excluding transaction expenses, intangible amortization and other one time charges in connection with the acquisition.
NXP reported that it’s cordless and VoIP terminals business generated approximately $220 million revenue last year and comprises approximately 200 staff based at locations around the world, most of whom will transfer to the DSP Group.
Frans van Houten, president and CEO of NXP noted in a statement, “This transaction will create a strong combination with the scale to grow its business. It allows NXP to focus our growth on the six chosen market segments: cellular phones, personal entertainment, home electronics, automotive, identification and multi market semiconductors.”
“Additionally, with the proceeds we will be able to strengthen these segments, for example with future acquisitions. I am confident that this deal will benefit our global customers in the cordless market, as they will be served well by this new strong market leader,” van Houten added.
Eli Ayalon, chairman and CEO of the DSP Group commented, “Combining our operations creates a powerful force that will put DSP Group firmly into a leadership position in terms of scale and technology for the benefit of all major customers in our industry.”
“We will have a much stronger European presence to help us accelerate the penetration of VoIP and DECT technologies in the region and will have a more powerful research and development engine that will benefit from the advanced NXP process technologies. NXP will also become a strategic investor and will get a seat on the Board of Directors of DSP Group, and will not transfer its shares of DSP Group common stock for at least two years following the closing,” Ayalon added.
The transaction is expected to close in Q3.