BURLINGTON, Ont. – Shares in Gennum Corp. (TSX:GND) more than doubled on Tuesday after California-based technology firm Semtech announced a friendly $500 million bid for the semiconductor maker.
The company’s stock rose $7.29 to $13.44 in afternoon trading on Toronto Stock Exchange. However, that is still less than the $13.55 in cash for each common share that Gennum stockholders will receive under the terms of the deal.
Semtech (Nasdaq:SMTC) said on a conference call Tuesday that Gennum, its biggest-ever acquisition, would help diversify its offerings and give it a significant boost towards becoming a $1-billion company.
“We believe that Gennum is an extremely good fit strategically, culturally and financially with Semtech and we are very excited by both the short-term and long-term opportunities that the acquisition brings to Semtech,” said Mohan Maheswaran, Semtech president and CEO.
Gennum, based in Burlington, Ont., designs and sells products that enable video, data and multimedia content to be transmitted at high speeds over long distances
Semtech, a supplier of analog and mixed-signal semiconductors for high-end consumer, computing, communications and industrial equipment, estimates the acquisition will result in at least $15 million of annual cost savings as well as add complementary new products to its portfolio.
Gennum’s focus on creating enabling technology would address an “exponential growth in global bandwidth demand’ and complement Semtech’s offerings in that sector, said Maheswaran.
Semtech said the addition of Gennum will make it a key technology supplier to many major data communications manufacturers, as well as manufacturers in the growing fields of storage, networking, and cloud computing, as well as in the emerging HD video surveillance markets.
“We believe there is future strategic value in taking our wireless products and Gennum’s video products combined with our power and protection products into the same strategic (original equipment manufacturers),” Maheswaran said.