NEW YORK (TheStreet) -- Shares of Lattice Semiconductor (LSCC) - Get Lattice Semiconductor Corporation Report were gaining 12.3% to $7.40 Tuesday following the announcement that the programmable logic device maker will acquire Silicon Image (SIMG) .
Lattice will pay $73.0 a share in cash, about $600 million, to acquire Silicon Image. The price is a premium of about 24% over Silicon Images Monday closing price of $5.90.
The two companies expect the deal to close by the end of March 2015.
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"We are excited to move forward with Silicon Image and confident we will be able to drive higher revenue and earnings growth, through the benefits of better economies of scale and material cost synergies," Lattice president and CEO Darin G. Billerbeck said. "We expect this transaction to be immediately accretive on a non-GAAP basis."
TheStreet Ratings team rates LATTICE SEMICONDUCTOR CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate LATTICE SEMICONDUCTOR CORP (LSCC) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LSCC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.07, which clearly demonstrates the ability to cover short-term cash needs.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, LATTICE SEMICONDUCTOR CORP's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $15.26 million or 64.69% when compared to the same quarter last year. Despite a decrease in cash flow LATTICE SEMICONDUCTOR CORP is still fairing well by exceeding its industry average cash flow growth rate of -80.33%.
- You can view the full analysis from the report here: LSCC Ratings Report