Back to top

Analyst Blog

Exar Corp. (EXAR - Snapshot Report), a leading provider of analog and mixed-signal integrated circuits (ICs), successfully concluded its bid to acquire the outstanding stock of Integrated Memory Logic (IML). The transaction is valued at $223 million.

The tender offer seeks to buy approximately 92% of IML’s outstanding shares at a proposed price of around $3.02 per share. Any remaining shares will be acquired by Exar in a follow-on merger.

The offer follows Exar’s announcement of a definitive merger agreement on Apr 27 to this fabless semiconductor design company through its wholly-owned subsidiary Image Sub Ltd. The deal is expected to conclude in second-quarter fiscal 2015, subject to customary closing conditions. Following the merger, IML will become a wholly-owned subsidiary of Exar.

IML designs optical and flash storage technology for display and LCD panels that are used by tablets, notebooks, PC monitors and LCD televisions. The acquisition will augment Exar’s product portfolio by adding differentiated analog mixed-signal and power management products to its offerings. The merger will unlock significant value once Exar leverages IML’s strategic partnerships with major original equipment manufacturers.

IML’s core competencies in areas of system interface and analog circuit implementation distinguish it from broad-based suppliers. The company also boasts an impressive client list as well. The integration of the capabilities and resources of both companies will generate immediate synergies and provide scale benefits, resulting in enhanced market shares.

Exar will also capitalize on the opportunity to expand its footprint in the markets of Korea, Taiwan, Japan and China where IML has a strong presence.

Exar expects the transaction to be immediately accretive to its pro-forma earnings per share. The proposed acquisition is expected to consolidate its market share in the semiconductor design industry.

Exar currently sports a Zacks Rank #1 (Strong Buy). Other stocks in the industry that are worth considering include Applied Micro Circuits Corp. (AMCC - Analyst Report), PLX Technology Inc. and Advanced Micro Devices, Inc. (AMD - Analyst Report). While Applied Micro Circuits and PLX have a Zacks Rank #1 (Strong Buy) each, Advanced Micro Devices carries a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.