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13 August 2007


RFMD diversifies by acquiring Sirenza

The world’s biggest GaAs RFIC maker, RF Micro Devices Inc of Greensboro, NC, USA, has agreed to acquire RF component supplier Sirenza Microdevices of Broomfield, CO, USA for about $900m ($300m in cash plus the rest in stock, based on $16.64 per share, a 17% premium over Sirenza's closing stock price on 10 August).

The transaction has been approved by the two boards of directors, and is expected to be completed in fourth-quarter 2007, subject to approval by the firms’ stockholders as well as regulatory approval. Upon completion, current RFMD and Sirenza stockholders will own about 67% and 33% of the combined company, respectively. The board of directors is expected to consist of nine members from RFMD and two members from Sirenza.

RFMD designs and manufactures radio systems and solutions including power amplifiers, transmit modules, cellular transceivers and system-on-chip (SoC) solutions, mainly for cell-phone handsets, cellular base-stations, wireless local area networks (WLANs) and global positioning systems (GPS).

Sirenza and its subsidiary Premier Devices Inc of San Jose, CA, USA, which has manufacturing facilities in Shanghai, China and Nuremberg, Germany, design and develop silicon and GaAs-based ICs, multi-chip modules (MCM) and passive RF components for commercial communications, consumer, and aerospace, defense and homeland security equipment markets.

RFMD says that the acquisition will accelerate its penetration of the multi-application high-growth end markets that Sirenza addresses, and enable it to extend its IC design and integration expertise into those markets. Sirenza’s more diversified portfolio and customer base should increase RFMD's total addressable market by about 67% to more than $20bn, the firm reckons.

The management teams will be combined to address the resulting expanded opportunities. RFMD’s Bob Bruggeworth will continue as president and CEO of the combined company, but Sirenza’s president and CEO Bob Van Buskirk will relocate to North Carolina and lead RFMD’s new Multi-Market Products Group.

“This strategic acquisition brings together two companies with leadership positions and considerable expertise in RF systems and solutions,” says Bruggeworth. “It creates the world’s largest, most diversified and best positioned RF company, with a broad set of customers and a diversified product portfolio of high-performance components and systems-level solutions,” he claims. The transaction will allow RFMD to apply its cellular-focused RF integration and systems-level design expertise across Sirenza's broad reach in multiple high-growth RF markets, including broadband/CATV, wireless infrastructure, WiMAX and aerospace and defense, the firm says.

Also, the transaction will allow Sirenza to expand its revenue stream beyond component-level solutions and drive supply chain and procurement efficiencies, due to RFMD's high-volume manufacturing capabilities, adds Bruggeworth. “Our two businesses are highly complementary in terms of customers, markets, products and manufacturing expertise.”

“We have great potential to accelerate revenue growth and expand margins by leveraging the technology base, supply chain and leadership position RFMD has achieved [in the cellular market],” says Van Buskirk. “There is a tremendous opportunity to apply the highly integrated, systems-level design expertise demanded by RFMD’s cellular handset customers to the markets that Sirenza currently serves,” he adds. “Our very complementary companies can deliver more highly integrated solutions.”

See related items:

RFMD, Skyworks and Triquint grew GaAs device market share to 55% in 2006

Sirenza banks record quarter

RFMD’s revenues fall 11%, but forecasts 9-16% bounceback this quarter

Handset PA suppliers set for consolidation

RFMD moves up the rankings

RFMD expands Beijing assembly facility’s capabilities

RFMD and Skyworks gain share in handset PAs: further consolidation likely

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