M/A-COM Technology Solutions Holdings Inc. will acquire semiconductor company Mindspeed Technologies Inc. in a $272 million deal, with the company’s wireless business to be sold off or wound down.
M/A-COM produces analog semiconductors for wireless and wireline applications in RF, microwave and millimeter wave, as well as devices, integrated circuits, components, modules and sub-systems. Its markets include network operators (cable television, cellular backhaul and fiber optics, which accounted for 26% of its $83.7 million in the third quarter of this year); aerospace and defense (28% of quarterly revenues) and various verticals including automotive, industrial, mobile and other applications.
Mindspeed made big news last year when it acquired Picochip, which designed semiconductors, software and system-on-chip solutions with a specialization in femtocells and WiMAX. That acquisition was to position Mindspeed as an early leader in the small cell market.
Now, however, M/A-COM said that Mindspeed is in “advanced discussions” with a buyer for its wireless unit, which it intends to sell before the acquisition transaction with M/A-COM closes. The transaction is expected to close in December, according to M/A-COM’s recent quarterly call with investors.
During that call, John Croteau, M/A-COM’s president and CEO, told investors that the acquisition “promises to be transformative for M/A-COM and is a major milestone in the company’s long history. The proposed transaction will not only reposition our company, further elevating us as a leading supplier of high-performance RF and microwave solutions, but we believe it also redefines our small corner of the semiconductor industry and the competitive landscape for years to come.”
Croteau said that the purchase of Mindspeed “will transform M/A-COM into a leading global provider of 100G optical solutions and underscores our core growth strategy in the optical and networking markets” and that the company’s interest in Mindspeed is its “high-growth, high-margin HPA business as well as its cash-generating VoIP busines.”
The addition of the HPA portfolio aligns well with M/A-COM’s business model, Croteau added, as does its SiGe-based products, which will strengthen M/A-COM’s core RF and microwave position as well as expand its geographic reach by leveraging Mindspeed’s strong activity in Asia.
M/A-COM said in announcing the acquisition that Mindspeed’s communications processor business “currently does not align with M/A-COM’s long-term strategic focus, and therefore additional options will be explored while continuing to support its customers.”
If the wireless business isn’t sold, M/A-COM said, it will be restructured and wound down.
“While you may know Mindspeed more for their communications processors, Voice over IP and more recently their forays into wireless, the fact is that nearly half of their revenue comes from high-performance analog products for high-speed switching and signal conditioning and next-generation network gear,” Croteau told investors on the quarterly call. “That part of the business is fully complementary to our portfolio and fits perfectly in our model.”
