Shares of Spreadtrum Communications Inc. (ADR) (NASDAQ: SPRD) rallied on Friday after the smartphone chip maker said that it has agreed to be acquired by China’s Tsinghua Holdings Co in deal valued at $1.78 billion.
According to the terms of the deal, Tsinghua will offer $31 per ADS, which implies a premium of 17% over the Spreadtrum Communications Inc’s Thursday’s closing stock price of $26.45.
The deal was sweetened by Tsinghua. The Shanghai-based Spreadtrum was offered $28.50 per ADS by Tsinghua, last month.
Tsinghua Unigroup Ltd, which is a state owned corporation, is subsidiary of Tsinghua Holdings.
Both companies’ respective boards have unanimously approved the deal; however, the deal still requires an approval from Spreadtrum’s shareholders, the antitrust board and other regulatory bodies.
Spreadtrum said that it will convince shareholders to vote in favor of the deal.
Commenting over the deal, Tsinghua Unigroup’s CEO Zhao Weiguo said “Spreadtrum and Tsinghua Unigroup will supplement each other and create enormous synergies in China and abroad,” according to the Wall Street Journal.
“Tsinghua Unigroup is in the unique position to offer unique expertise in consumer products, protection and support from a vast IP portfolio, and unique access to important capital markets in China,” added the CEO.
About Spreadtrum Communications Inc
Headquartered in Shanghai, Spreadtrum designs mobile chipset platforms meant for smartphones, and some other consumer electronic items.
Founded in April 2001, the Company has R&D facilities in Beijing, Shanghai and Tianjin in China, and San Diego in the United States. Spreadtrum has technical support center in Shenzen while international field support centers are located in India, Taiwan and S. Korea.
Last year, Spreadtrum reported annual revenue of $720 million.
“The acquisition by Tsinghua will provide investors with significant returns, and position the Spreadtrum business for continued growth,” said Dr. Leo Liyou Li—Chairman and CEO of Spreadtrum.
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