Lattice Semiconductor Corp. (LSCC) on Tuesday said it would acquire Silicon Image Inc. (SIMG) in a $600 million deal the companies said would create a more efficient chipmaker better able to pursue future growth.
Terms of the deal call for Hillsboro, Ore.-based Lattice to pay $7.30 per share in cash for Silicon, a premium of 23.7% to the target's Monday close. Lattice said it expects to extract $32 million in annual synergies from the combination, which it said should immediate contribute to earnings per share.
Sunnyvale, Calif.-based Silicon is a maker of wired and wireless connectivity chips, including the near ubiquitous HDMI technology that connects high definition televisions to source components. Lattice also makes connectivity gear, and CEO Darin Billerbeck said that both companies would benefit from the creation of a one-stop-shop for the equipment.
"This is a truly transformative event for both Lattice Semiconductor and Silicon Image," Billerbeck said. "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."
Silicon's products are well regarded inside the industry, but some insiders worried its small size prevented it from capitalizing on its advantages. Activist fund Engaged Capital LLC in December revealed a 5.2% stake in the company, and according to sources at the time was considering launching a proxy fight. Silicon had been on The Deal's watch list of companies most likely to be targeted by an activist before Engaged revealed its activist stake.