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IDT acquires ICS for $1.7 billion

Posted: 17 Jun 2005 ?? ?Print Version ?Bookmark and Share

Keywords:communications? computing? consumer?

In a major move to expand its product offerings, Integrated Device Technology Inc. (IDT) on Wednesday (June 15) announced plans to acquire Integrated Circuit Systems Inc. (ICS) for $1.7 billion.

The chip makers believe that the transaction will provide a platform for growth within the communications, computing, and consumer markets.

For the twelve months ending March 31, the combined company had revenues of approximately $645 million and generated $86 million in cash flow. The combined company will retain the IDT name and its stock will continue to trade on the NASDAQ national market under the ticker symbol "IDTI". The merged company will be headquartered in San Jose, California.

"IDT has established a solid reputation for developing vital semiconductor solutions targeting various communications infrastructure applications, including wireline, wireless and enterprise," said Greg Lang, president and chief executive of IDT, in a statement. "Likewise, ICS has excelled in providing timing technology to consumer, PC and DIMM customers."

"Combining IDT with ICS will allow us to complement our strength in timing devices for consumer and computing customers with IDT's leadership in a wide range of communications products," said Hock Tan, president and chief executive of ICS, in a statement.

Lang will serve as president and chief executive officer of the combined company and Tan will assume the role of chairman of the board, with an executive role in the integration of ICS with IDT. The board of directors of the combined company will have nine members, with IDT designating five directors, including Lang, and ICS designating four directors, including Tan.

Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of both companies, ICS stockholders will receive 1.300 shares of IDT common stock and $7.25 of cash for each share of ICS stock. Based on closing prices as of June 15, 2005, this total consideration values ICS at approximately $1.7 billion or $23.54 per share.

Based on the most recent capitalization, current IDT stockholders will own approximately 54 percent and current ICS stockholders will own approximately 46 percent of the combined company. The transaction is subject to customary closing conditions, including shareholder and regulatory approvals, and is expected to be completed in the fall of 2005. IDT and ICS directors and executive officers have entered into voting agreements pursuant to which they have agreed to vote their shares in favor of the transaction.

- Mark LaPedus

EE Times

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