San Diego semiconductor maker Qualcomm Inc. (QCOM) - Get QUALCOMM Incorporated Report on Wednesday swooped in on U.K. rival CSR plc in a surprise agreed bid worth £1.6 billion ($2.6 billion) after the target rejected an August approach from Microchip Technology Inc. (MCHP) - Get Microchip Technology Incorporated (MCHP) Report

Qualcomm would pay 900 pence per CSR share, a 37% premium to Tuesday's close and 57% higher than CSR's close Aug. 27, the day before Microchip went public with its takeover approach.

"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," said Qualcomm CEO Steve Mollenkopf in a statement.

CSR in August gave little information as it rejected the approach from Microchip but also noted it would begin reviewing its options. The U.K. Takeover Panel had given Chandler, Ariz.-based Microchip until Wednesday to reach an agreement with CSR. Chipmakers have been linking up to better wrestle with the slim margins created by a crowded market.

Munich-based Infineon Technologies AG in August agreed to buy El Segundo, Calif., rival International Rectifier Corp. (IRF) for $3 billion to broaden its portfolio and expand in the U.S. and China. Intel Corp. (INTC) - Get Intel Corporation (INTC) Report is also working to complete its $650 million purchase of the Axxia chip business from Avago Technologies Ltd. (AVGO) - Get Broadcom Inc. Report

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CSR is based in Cambridge, England and is best known for its Bluetooth components which enable wireless communication between devices. It had first-half sales of $374.5 million, down from $500.4 million a year earlier as it wound down "legacy businesses." Profit fell to $41 million from $58.4 million. It employs 2,130.

"While the CSR directors believe that CSR is now strongly positioned to execute its strategy of delivering growth and sustainable returns in the medium and long term, we believe that the offer from Qualcomm provides CSR shareholders with an immediate and certain value which is highly attractive," CSR chairman Ron Mackintosh said in a statement.

Qualcomm expects to close the acquisition next summer. It should add to the buyer's 2016 earnings.

CSR shares jumped 31.4%, or 207 pence, to 865.50 pence in morning London trading.

Qualcomm took financial advice from Deutsche Bank AG's Adam Howell, Thomas Cho, James Stynes, Richard Sheppard, Chris Raff and Charles Wilkinson.

For financial advice, CSR turned to JPMorgan Cazenove Ltd.'s Rupert Sadler, Madhu Namburi, Dwayne Lysaght, Jonathan Wilcox and James Robinson as well as Goldman Sachs International's Pawan Tewari, Tammy Kiely, Mark Sorrell, Nick Harper and Alex Garner.