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Semtech buying Gennum Corp for $500M

BURLINGTON, Ont. - Ontario-based semiconductor maker Gennum Corp. (TSX:GND) said Monday that it is being acquired by Semtech Corp.(Nasdaq:SMTC) for $500 million.

BURLINGTON, Ont. - Ontario-based semiconductor maker Gennum Corp. (TSX:GND) said Monday that it is being acquired by Semtech Corp.(Nasdaq:SMTC) for $500 million.

"After a comprehensive review of Gennum's strategic options, we are convinced that this is the best avenue to unlock the underlying value for shareholders that has been created by the Gennum team," said company president and CEO Franz Fink.

"Our employees have been instrumental in building Gennum and will remain a critical component of the combined company as we move forward in the next chapter of our development."

Gennum has some 450 employees, including more than 240 engineers, with offices in Canada, Germany, India, Japan, Mexico, Taiwan, the United Kingdom and the United States. Its headquarters is in Burlington, Ont.

Under the terms of the deal, announced after markets closed, Gennum stockholders will receive $13.55 in cash for each common share. That is more than double the company's closing price of $6.15 per share Monday on the Toronto Stock Exchange.

The transaction, subject to approval by two-thirds of shareholders, has been unanimously approved by the Gennum board on the recommendation of a special committee of the board.

The agreement contains, among other things, a $19.35-million termination fee payable by Gennum in certain circumstances. Semtech has also been granted a right to match competing proposals.

"The acquisition of Gennum will extend Semtech's leading portfolio of infrastructure products to the metro, access and enterprise computing markets and will enable Semtech to provide its customers with more platforms to differentiate their own high-speed voice, video and data transmission products," Semtech said in a joint news release with Gennum.

Gennum designs and sells products that enable video, data and multimedia content to be transmitted at high speed over long distances, while maintaining signal integrity and eliminating the potential for errors in transmission. Its products are used in broadcast, networking, storage, telecommunications and consumer connectivity equipment.

California-based Semtech, with just under 1,000 employees, said it expects to finance the acquisition through a combination of cash on hand and new bank financing, having already received a financing commitment of up to US$400 million from Jefferies Finance LLC.

Semtech estimates that the acquisition will result in at least $15 million in annual synergies, which it expects will be fully achieved in the company's 2014 fiscal year.

Semtech is a supplier of analog and mixed-signal semiconductors for high-end consumer, computing, communications and industrial equipment.

 
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