Mindspeed Technologies has signed a definitive agreement to acquire UK-based Picochip Limited, a supplier of system-on-chip (SoC) solutions for small cell base stations, for a purchase price of approximately $51.8 million.
The expected acquisition will create the clear market leader in small cell base station solutions for next generation mobile broadband communications infrastructure, an explosive growth market. Research firm Mobile Experts LLC predicts small cell base station shipments will grow to 24 million units by 2016, creating a market for alternative cells, which could exceed the macrocell market in terms of transceiver unit shipments during the next four years.
Together, Mindspeed and Picochip will offer the most comprehensive portfolio of base station semiconductor solutions on the market, from residential to enterprise to pico/metro applications. Through this timely combination, Mindspeed's enhanced product roadmap for single- and multi- mode 3G/4G solutions will enable it to capitalize on the rapid acceleration of the small cell wireless base station market, while also addressing comprehensive support for all 3G and 4G global air interface standards.
The firms estimate the total addressable market for the combined entity will grow to $3 billion by 2016. They also believe technology synergies, operational synergies and opportunities for cross-selling products within each company’s customer base are substantial.
For Picochip, Mindspeed will pay cash of $27.5 million and approximately 5.19 million in new shares of Mindspeed common stock, amounting to approximately 15% of outstanding Mindspeed shares, for a total of $24.3 million, based upon the closing price of Mindspeed’s common stock on January.