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London - US Qualcomm agreed to buy CSR for $2.5bn, offering what it hopes is a knock-out blow to win the British Bluetooth specialist which is growing in areas like automotive and wearable devices.
Qualcomm, the world's number one mobile chipmaker, has agreed to pay 900 pence a share in cash for CSR, a 56.5% premium on the share price before the start of the offer period in August, CSR said on Wednesday.
At that time, the British company rebuffed an approach from US chipmaker Microchip Technology, saying its undisclosed offer was not enough. The two had remained in talks to reach a deal, with a deadline imposed by UK regulators for Wednesday.
There is a chance alternative bidders may emerge, Jeffries analyst Robert Lamb told investors in a research note, although he cautioned that the high multiple relative to recent chip mergers which Qualcomm is paying may prove difficult to trump.
"With a firm price now in the open, it could tempt others to play their hand," Lamb said.
Qualcomm CEO Steven M Mollenkopf said the addition of CSR would allow it to diversify into the markets for short-range, wireless Bluetooth chips and audio processing used in portable audio, automotive controls and wearable devices.
Good combination
"Combining CSR's highly advanced offering of connectivity technologies with a strong track record of success in these areas will unlock new opportunities for growth," he said.
Qualcomm, the dominant maker of chips used in smartphones, has been looking to expand beyond the phone market into emerging areas such as wireless home appliances and other connected devices that fly under the banner of "The Internet of Things".
In May, it agreed to acquire Wilocity, a maker of wireless HDMI connections, used to transmit video between computers and displays, and it developed AllJoyn, an open-source platform that allows devices to share information with other nearby devices.
CSR CEO Joep van Beurden said the two companies were a good combination.
"If you look at us, we are focused on all the accessories around the phone," he said.
"In voice and music, we are strong in headsets, sound bars and speaker docks; and we are strong in cars, which more and more are an extension of the phone with infotainment."
Jeffries analyst Lamb labelled the merger "a good fit", advising clients: "Clearly they [Qualcomm] have gone down the 'buy' rather than 'make' route."
CSR, short for Cambridge Silicon Radio, specialises in connectivity, with its chips used in products such as portable audio speakers and Apple-owned Beats headphones.
'Connected car'
It was a pioneer in the market for wireless Bluetooth technology, which is now mushrooming in popularity for use in wireless audio speakers, network-connected appliances in homes and for use in so-called "connected car" features in autos.
Microchip, a diversified maker of analogue and digital chips based in Chandler, Arizona, together with CSR, had announced in late August that they were in preliminary talks on a merger.
Last week, Microchip shocked stock markets worldwide by warning it expected lower quarterly sales and going further to make a sweeping prediction that the chip industry at large was likely to suffer a broad downturn over the coming quarters.
