British company CSR plc, based in Cambridge, is to buy Israeli chip company Zoran Corp. (Nasdaq: ZRAN) for $679 million, the two companies announced last night. Zoran is managed by founder Levy Gerzberg.
Zoran's share price closed at $9.32 on Wall Street on Friday, giving it a market cap of $460.9 million, so that the acquisition price represents a 47.3% premium.
CSR is a supplier of wireless connectivity and location chips. It sells Bluetooth, GPS, FM, Wi-Fi and audio devices. It employs about 1,500 people, and posted an operating profit of $376.6 million in the fourth quarter, on revenue of $80.6 million. Zoran provides imaging and video chips for digital camera, home entertainment and multifunction printer products. It employs about 1,550 people, and posted an operating profit of $186.1 million in 2010, on revenue of $357.3 million.
Zoran's revenue guidance for the first quarter of 2011 is higher than market estimates, but so is its forecast loss. Revenue is expected to be $81-85 million, while the non-GAAP net loss is expected to be $0.35-0.39 per share ($17.3-19.3 million), compared with a loss of $0.03 per share in the corresponding quarter of 2010.
Following the merger, Zoran's shareholders will receive 35% of the merged company. For each Zoran share, the shareholders will receive 1.85 shares in CSR.
Completion of the CSR-Zoran merger is expected in the second quarter of 2011, subject to CSR and Zoran shareholders and regulatory approvals.
CSR CEO Joep van Beurden said, “Digital electronic devices are becoming increasingly connected and full of media-rich features, including the ability to stream images from your camera to your PC or video conferencing from your Smartphone. Zoran’s market leading imaging and video capabilities, combined with our own connectivity and location capabilities, make this a great opportunity for us. The same is true in the home entertainment space where wireless connectivity is increasingly being adopted in a range of consumer devices such as digital TVs Zoran’s image technology combined with our connectivity skills will provide a differentiated proposition which will be appealing for our customers."
Over the past three months, a control battle has taken place between hedge fund Ramius and the Zoran board. Ramius, which attained a 9.3% stake in Zoran, called for the board to be replaced on the grounds that that it was destroying value for the shareholders, and failing to carry out the necessary action to restore the company to growth and profitability.
Published by Globes [online], Israel business news - www.globes-online.com - on February 21, 2011
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