Communications semiconductor and technology supplier GigOptix, Inc. (NYSE MKT:GIG) says it has agreed to acquire privately held Magnum Semiconductor, Inc., a provider of silicon ICs, system on chips (SoCs), software, and IP for the professional video broadcast and Internet of Things (IoT) camera markets. GigOptix says it will pay approximately $55 million net in cash and stock, based on the average closing price of GigOptix stock for the trailing 30 days ended April 1, 2016. To reflect the extension of its capabilities, GigOptix will change its name to GigPeak, Inc.
GigOptix will issue approximately 7.1 million shares and pay approximately $35.8 million in net cash for Magnum; a significant portion of the cash will be used to repay Magnum's outstanding debt and other liabilities. GigOptix expects to fund the purchase price of the acquisition from a combination of cash on hand and incurrence of additional debt through a $15 million term loan provided by Silicon Valley Bank. GigOptix expects the acquisition to close April 5, 2016, with the name change taking effect Wednesday, April 6, 2016. The company will continue to trade on the NYSE MKT exchange under the symbol "GIG."
Magnum's semiconductor products, under the D7Pro name, include:
- the D7Pro 4:2:2 multi-format distribution and contribution decoder chip for H.264 and MPEG-2 broadcast applications
- the D7Pro 4:2:2 10-bit contribution encoder chip for H.264 and MPEG-2 broadcast contribution applications
- the D7Pro distribution encoder for H.264 and MPEG-2 SD/HD broadcast applications
- the D7Pro any-to-any transcoder chip, which also can perform encoder, transrater, multi-screen, ad insertion, and channel branding functions for H.264 and MPEG-2 secondary distribution broadcast applications.
The company also offers other products. "We look forward to supporting Magnum's continuing efforts as part of the newly rebranded GigPeak family to drive innovation through their proven and market-accepted software-based solutions to deliver best-in-class video and data to the world's leading broadcasting and IoT camera OEMs and customers," said Dr. Avi Katz, GigOptix's founder, chairman of the board of directors, and CEO. "The exponential growth in video traffic will further expand the demand for GigOptix's and Magnum's solutions in real-time high-speed and high-quality information streaming, [and] video compression in the cable, satellite, telco/IPTV, and mobile/over the top (OTT) markets. The increasing need for powerful video analytics capabilities has also been driving significant interest in Magnum's solutions in the IoT camera markets by major OEMs.
"We are very excited by the many opportunities this combination offers that will enable us to expand our focus from the enterprise networking and cloud connectivity to broadcasting head-ends, IoT, and consumer markets," Katz added.
Magnum Semiconductor generated approximately $19 million in revenue in FY 2015, based on unaudited results, according to GigOptix. Katz and his team expect the acquisition to prove immediately accretive to FY2016 financial results.
This is the eighth acquisition for GigOptix since Katz assumed leadership of the company as it transformed from iTerra in April 2007 (see "iTerra pushes 'restart' with new name, products").
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