Integrated Device Technology Inc (NASDAQ:IDTI) and GigPeak, Inc. (NYSE:GIG) announced that they have signed a definitive agreement for IDT to acquire GigPeak, Inc., for total cash consideration of $3.08 per share, or approximately $250 million in cash. This per share consideration would represent a premium of approximately 22% to GigPeak’s closing share price on February 10, 2017.
The acquisition of GigPeak provides IDT with a highly regarded optical interconnect product and technology business that is complementary to IDT’s leadership position in real-time interconnect products.
GigPeak’s optical interface products are already broadly used by leading companies in the Communications, Cloud Data Center, and Military/Aviation markets. IDT will now provide seamless ultra-high speed data connectivity products using electrical, RF, and optical technologies.
“GigPeak is a recognized leader in high performance Optical, RF, and Video Transport technology, and is a perfect fit for IDT. The products, technology, and culture of GigPeak all complement and represent an acceleration of our current strategy,” said Gregory Waters, IDT President & CEO. “We gain an exceptional group of talented people and valuable intellectual property with the GigPeak team, and welcome them into one of the most innovative companies in the semiconductor industry.”
“IDT’s acquisition of GigPeak will be a meaningful milestone for all of our stakeholders — stockholders, employees, customers and partners,” said Dr. Avi Katz, Founder, Chairman and CEO of GigPeak, Inc. “We find an exceptional culture, customers, business and technology compatibility with IDT, and we are delighted to join this fine team. Upon the consummation of this acquisition, our leading product suite, which currently addresses the need for greater bandwidth across the network, will now have the advantage of leveraging the scale of resources and broad distribution channels of IDT.”
Offer Recommended by GigPeak Board of Directors
Under the terms of the merger agreement, IDT will commence a tender offer to acquire all of the issued and outstanding common stock of GigPeak for $3.08 per share. The implied fully-diluted equity value of the offer amounts to approximately $250 million.
The Boards of Directors of both GigPeak and IDT have unanimously approved the terms of the merger agreement, and the Board of Directors of GigPeak has resolved to recommend that stockholders accept the offer, once it is commenced.
The acquisition is structured as an all-cash tender offer for all outstanding issued common stock of GigPeak followed by a merger in which remaining shares of GigPeak would be converted into the same dollar per share consideration as in the tender offer. The transaction is not subject to a financing condition, and completion is anticipated during the second calendar quarter of 2017.
The transaction is subject to customary conditions, including the tender of the majority of the outstanding GigPeak shares and the expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is expected to close during the second calendar quarter of 2017. GigPeak is expected to be delisted from the NYSE MKT and integrated into IDT thereafter.
Shares of Integrated Device Technology are currently trading at $24.61, down $0.12 or -0.49%. IDTI has a 1-year high of $26.66 and a 1-year low of $17.25. The stock’s 50-day moving average is $24.90 and its 200-day moving average is $22.59.
On the ratings front, IDTI has been the subject of a number of recent research reports. In a report issued on February 8, Roth Capital analyst Sujeeva De Silva reiterated a Buy rating on IDTI, with a price target of $28, which represents a potential upside of 13% from where the stock is currently trading. On the same day, Needham’s Quinn Bolton reiterated a Buy rating on the stock and has a price target of $28.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Sujeeva De Silva and Quinn Bolton have a yearly average return of 21.0% and 20.4% respectively. Silva has a success rate of 65% and is ranked #83 out of 4428 analysts, while Bolton has a success rate of 72% and is ranked #25.
Overall, one research analyst has rated the stock with a Sell rating, 4 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $27.00 which is 9.2% above where the stock opened today.
Integrated Device Technology, Inc. designs, develops, manufactures and markets low-power, high-performance mixed signal semiconductor solutions for the advanced communications, computing and consumer industries. It offers communications solutions for customers within the enterprise, data center and wireless markets. The company operates business through two segments: Communications and Computing & Consumer. The Communications segment includes clock and timing solutions, Serial RapidIO switching solutions, Crystal Oscillator replacements, radio frequency, signal path products, flow-control management devices and first in and first out, integrated communications processors, high-speed static random access memory and digital logic and telecommunications products. The Computing & Consumer segment includes clock generation and distribution products, high-performance server memory interfaces, PCI Express switching solutions, signal integrity products, multi-port products, touch controllers, PC audio, power management solutions and video products.