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London - US handset maker Cirrus Logic is to buy Wolfson Microelectronics for an agreed £291m in cash, sending shares in the British microchip maker up more than 70%.
Wolfson, an Edinburgh-based company which specialises in audio technology, had suffered in recent months after missing out on a deal to make chips for the 4G version of Samsung Electronics's Galaxy S4 smartphone.
Wolfson becomes the latest in a series of British technology groups to be bought by overseas interests in recent years, after Autonomy was sold to Hewlett-Packard Co, CGI Group Inc bought Logica and Misys was acquired by US-based private equity firm Vista Equity Partners.
Cirrus, a supplier to Apple Inc, said the agreed 235 pence per share deal for its nearest rival would strengthen its portfolio and add new products such as Wolfson's successful microphones.
"Together with Cirrus Logic, we believe this will create a powerful platform for future growth, above and beyond our standalone potential," said Wolfson chair Michael Ruettgers.
Wolfson, which employs around 420 at 12 locations worldwide, also published first-quarter results showing slightly lower than expected revenue.
The group posted an underlying operating loss of $4.5m, up from $2.8m a year before, on revenue which slumped to $28.8m from $48.1m.
Cirrus said its offer already had the backing of 7% of Wolfson's investors.
Analysts at brokerage N+1 Singer said their confidence in Wolfson's technology had not been fully reflected in the financial performance of the company, but said the bid showed the value of its expertise.
"The premium valuation in today's bid reflects the IP (intellectual property) in the product portfolio and the potential which this has in a larger-scale business," they said.
Shares in Wolfson - which dropped to their lowest level in nearly two years in February after the company posted an underlying operating loss of $4.5m for the final quarter of 2013 - were up 73% in early morning trading.
The advance took its stock market value to £270m.
Dan Ridsdale, analyst at Edison Investment Research, said Cirrus had got a good deal.
"While (Wolfson's) Q1 results were weak as expected, we feel that Cirrus is buying this business at a trading nadir and believe that a recovery in (business) ... primarily at Samsung should drive a strong recovery in H2," said Ridsdale.
In its results statement, Wolfson said it was strengthening its relationship with Samsung with a number of design wins.
