Israeli semiconductor licensing company Ceva Inc. (Nasdaq:CEVA); LSE:CVA) reported that it would sell its stake in GloNav Inc., a US-based fabless global positioning systems (GPS) semiconductor company for around $17 million following GloNav's acquisition by NXP Semiconductors Inc for an initial $85 million, and possibly up to an additional $25 million in cash over the next two years, based on GloNav meeting specific milestones.The deal is expected to close in the first quarter of 2008, subject to regulatory approvals.
Ceva CEO Gideon Wertheizer, said, "Today's announcement that NXP Semiconductors is to acquire GloNav is great news for CEVA and in line with the company's strategy to focus on its strength as a leading Silicon Intellectual Property (SIP) provider for DSP cores, Multimedia, Bluetooth and SATA products."
GloNav develops GPS and other satellite navigation technologies and products. It was established and funded by Atlantic Bridge Venture (ABVEN), a Europe-based private equity firm, in 2006 through the divestment of Ceva's GPS technology and product lines and merger with California-based RFDomus Inc. Ceva 's ownership in GloNav is 19.9% on a fully diluted basis and it is valued at $4 million in its financial statements.
NXP was founded by Philips more than 50 years ago. The company is headquartered in Europe, and produces semiconductors, system solutions and software for mobile phones, personal media players, TVs, and of other electronic devices.
In response to the news Maryland-based investment bank Ferris Baker Watts raised its target price for the company to $14. "Pretax proceeds to the company are expected to be $17 million next quarter, representing a capital gain of about $13 million," notes Ferris Baker Watts analyst Matthew Robinson. "Ceva could eventually see another $5 million from the deal. In addition, since GloNav technology utilizes Ceva digital signal processing technology, we expect additional royalties for the company at some point in the future if NXP is successful with the acquisition.
Explaining his decision to raise his price target, Robinson adds, "Since the deal with NXP was unexpected and incremental, we are raising our price target $0.50 to $14.00. Further, our bias is toward the expectation that the stock will achieve this target sooner than 12 months."
Ceva's share closed down 0.53% at $12.41 on Nasdaq on Friday, giving the company a market cap of $245.2 million.
Published by Globes [online], Israel business news - www.globes.co.il - on December 23, 2007
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