The Israeli chipmaker DSP Group has been acquired by American software company Synaptics Inc. for $540 million. The deal, which was unanimously approved by the boards of directors of both companies, will see Synaptics buy DSP Group, stock at $22.00 per share in an all-cash transaction. But some are crying foul, saying that the purchase price is unfair to DSP shareholders.
The two companies expect that their new combination will generate annual run rate synergies of $30 million for the new entity to be realized within 12 months of closing. The transaction is expected to be financed through a combination of cash on hand and a fully committed, incremental debt financing arrangement with a projected close by the end of calendar year 2021, subject to DSP Group shareholder approval and customary closing conditions.
DSP Group Inc. produces wireless chipsets for a wide range of smart-enabled devices. The company was founded in 1987 and offers next-generation solutions in the areas of voice, audio, video and data connectivity. The boasts that its tech allows customers to develop products that enhance the end-user experience.
They say that the only two things certain in life are death and taxes. Now they must add to that expression that the world cannot operate without computer chips, and that these chips keep on getting smaller and smaller. Or at least the microprocessors get smaller, allowing for the same sized chip to do ever more work at the same time.
This is why we can have such advanced smart phones and notebook computers, and why they can continue to offer new and more advanced features every year.
The U.S. has been falling behind in the chip making field for years now. A recent 60 Minutes report explained how the country is becoming ever more reliant on the importation of chips from countries in Asia. Shortages caused by disruptions in the supply chain due to the Covid crisis forced manufacturers to store incomplete inventories indefinitely.
Pictures showed countless new vehicles just sitting in open lots. They could not be sent to markets until the chips needing for operating their advanced computerized systems became available. Every day that the vehicles sat amounted to a loss for their manufacturers.
The DSP buyout, however, is currently under a cloud of suspicion after concerns were raised on behalf of shareholders that they are not being offered a fair purchase price. Ademi LLP announced that it is investigating DSP Group for possible breaches of fiduciary duty and other violations of law in its transaction with Synaptics.
Ademi LLP also alleges that DSP Group’s financial outlook and prospects are excellent, but their shareholders will receive only $22.00 per share in an all-cash transaction. “The merger agreement unreasonably limits competing bids for DSP Group by prohibiting solicitation of further bids, and imposing a substantial penalty of $19,774,000 if DSP Group accepts a superior bid. DSP Group insiders will receive millions of dollars as part of change of control arrangements,” asserted Ademi.
Our acquisition of DSP Group strengthens and diversifies our ultra-low power IoT portfolio with significant growth opportunities in SmartVoice, unified communications & collaboration, and wireless IoT devices. #iot #ultralowpower #edgeai https://t.co/WAWiNPTg5v
— Synaptics, Inc. (@SynaCorp) August 30, 2021
“We are excited to join forces with Synaptics, a recognized leader in products for IoT. This combination provides a great result for our shareholders who have supported us through this journey, delivering meaningful and certain value,” said Ofer Elyakim, CEO of DSP Group. “Our complementary portfolios together with the combination of our world-class engineering teams creates an exciting opportunity for DSP Group’s core technology to extend further into our existing customers’ product portfolio.”
“The DSP Group board of directors unanimously supports this transaction as it represents an excellent outcome for our shareholders,” commented Ken Traub, Chairman of the Board of Directors, DSP Group. “We would like to thank DSP Group’s management and employees for their dedication to executing our strategy and congratulate them on this exciting achievement.”