MediaTek buys ADI's wireless chipset biz for $350M

By Colleen Taylor, Contributing Editor -- Electronic News, 9/10/2007

Confirming nearly two months of industry speculation, Taiwan-based fabless semiconductor company MediaTek Inc. today announced that it has signed a definitive agreement to acquire Analog Devices Inc.'s (ADI) wireless chipset division for $350 million in cash.

The division includes ADI's Othello radio and SoftFone baseband chipset product lines, as well as certain cellular handset baseband support operations along with patents and other IP. As part of the transaction, MediaTek will take on about 400 ADI employees. According to the companies, the product lines represented approximately $230 million in revenue for ADI, based on fiscal year 2006 financial results.

ADI said it plans to continue to invest in the wireless handset market by focusing on developing high-performance analog, micro-electro mechanical systems (MEMS), and programmable digital signal processing (DSP) products.

"This is a winning transaction for customers of both companies," JiChang Hsu, general manager of MediaTek's wireless business, said in a statement. "With these added resources, our customers will be assured a roadmap of innovative solutions supported by a talented team that is focused on the needs of the wireless handset industry. Moreover, this acquisition will also bolster MediaTek's global operations and development in converging consumer solutions."

Wall Street watchers were similarly pleased with news of the acquisition. In a research note sent this morning, investment firm Lehman Brothers said the deal will allow ADI to "better focus on its core general purpose DSP and analog product lines." The firm also expressed pleasure with the larger trend that the deal seemed to fall into, adding that Lehman is "ultimately encouraged by the ongoing consolidation in the baseband industry."

The boards of directors of both MediaTek and ADI have approved the transaction, which is expected to close near the end of 2007, following the satisfaction of regulatory requirements and other customary closing conditions.