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Analyst Blog

On June 29 2009, Integrated Device Technology (IDTI - Snapshot Report) shareholders approved the acquisition of Tundra Semiconductor Corporation for C$6.25 in cash per share, or C$120.8 million for the company. All outstanding “out of the money” options will be taken over by IDT, while “in the money” options and RSUs will be paid off. Management intends to fund the acquisition with cash available on hand.

A combination of the technologies offered by the two companies are expected to enhance IDT’s existing interconnect solutions for the communications and computing markets. Particular benefits will be seen in serial switching and bridging functionalities that use PCI Express, Rapid IO and VME interconnect standards.

The company will also acquire Silicon Logic Engineering, Inc. (Tundra’s logic unit), which provides ASIC and FPGA design services. Following the acquisition, Silicon Logic Engineering will start operating as an IDT subsidiary. Management currently expects the acquisition to be accretive to the non GAAP EPS from the second full quarter of combined operation.

Tundra has been looking for an acquirer for some time now. Prior to the IDT bid, the company had received an offer from Gennum Corp, and had even entered into a definitive agreement with Gennum. However, Gennum’s offer price of C$86 million was significantly lower than IDT’s C$120.8 million.

Gennum chose not to exercise its option for meeting the higher price, and thereupon Tundra paid $5 million to Gennum by way of a termination fee. Both Tundra and Gennum are traded on the Toronto Stock Exchange.

IDT has been very active on the acquisition front. Over the last two years, the company has completed two major acquisitions that significantly increased its scale of operations.

Recently, the company also agreed to sell off its network search engine business to NetLogic Microsystems for $100 million less the cost of inventory (roughly 10 million). The cash would come in handy when paying off Tundra shareholders.

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