Privately held Picochip joins Nasdaq-listed silicon company for $51.8 million
Picochip, the UK based company whose small cell technology sits inside many of the leading femtocell products on the market, has been acquired by Mindspeed Technologies. The deal values Picochip at $51.8 million in cash and shares, plus a further potential earnout of $25 million.
A statement from the companies said that the merger would create a “clear market leader in small cell base station solutions” and that together the companies would deliver “the most comprehensive portfolio of base station semiconductor solutions on the market, from residential to enterprise to pico/metro applications.”
Rupert Baines, VP Marketing at Picochip, said that both companies had a shared vision of the potential of small cell growth and the need for small cells hat contain carrier-grade system on chip (SoC) technology. Picochip claims to have a 70% market share of the 3G/HSPA small cell infrastructure market, but transferring its 3G/HSPA growth into LTE was giving the company “trouble”, Baines said. The company markets its PC9608 solution for LTE.
The deal, therefore, is intended to produce a product roadmap that produces multi-standard, ARM-based, SoC products, combining 3G and 4G technology in a single product. Baines paid tribute to Mindspeed’s Transcede LTE product, which he described as being “really good” and well in advance of any other product available. The deal was about combining Picochip’s experience and expertise with Mindspeed’s greater scale and depth of Tier 1 OEM relationships.
Mindspeed counts NSN, NEC, Huawei, Samsung, Cisco and Alcatel Lucent amongst customers for its technology. Those Tier 1 OEMs are recognising a market need to move away from OEM-led platform approaches, Baines said.
Alan Taylor, Director of Marketing at Mindspeed, said that the deal would mean there were no small players left in the small cell chip space. The deal would put the combined company “way ahead” of Freescale, TI, Qualcomm or Broadcomm for small cell technology, he said.
Picochip has been privately funded since 2005, raising $110 million through six rounds of funding. Although a $51.8 million sale may look on the face of it to be a poor return for the private investors Baines pointed out that those investors are now shareholders in Mindspeed – offering them a greater potential for future returns. Neither man would be drawn on how the valuation of Picochip was arrived at.
Scottish Equity Partners, one of the longest standing investors, told Mobile Europe:
“We consider the acquisition of Picochip by Mindspeed to be in the best interests of the company, its shareholders, employees, customers and investors. Accordingly we are supportive of the transaction. Going forward we will be shareholders in Mindspeed and we believe the enlarged business will be well placed to take advantage of a growing market opportunity.”