Mindspeed, a US-based supplier of chipsets for network technology solutions, purchased small cell technology developer Picochip for $51.8 million in cash and shares.
Both companies hailed the agreement as one that will create a clear market leader in small cell base station solutions, although it appears Picochip needs the expertise and scale of Mindspeed to help make the transition to LTE.
While Picochip says it has achieved a dominant position in the 3G small cell market, according to its vice president of marketing Rupert Baines, the company was encountering problems transferring this growth in the LTE sector. Baines told Mobile Europe that the merger will allow the companies a product roadmap that includes multi-standard, ARM-based, system on a chip products, combining 3G and LTE technology on a single chip. He added that the deal was focused on combining Picochip's experience and expertise with Mindspeed's scale and depth of relationship with Tier 1 OEMs.
Baines also believes the deal will allow some of Picochip's "back burner" ideas to be explored. "The Transcede platform brings a lot of scope for moving some of our ideas up in scale," he told New Electronics. "We'll be able to do a lot of things that Picochip wouldn't have been able to do on its own."
Alan Taylor, Mindspeed's director of marketing, told New Electronics that the acquisition would mean that no small players were left in the small cell chip space. The deal would put the combined company "way ahead" of Freescale, Texas Instruments, Qualcomm or Broadcom for small cell technology.
However, while the deal valued Picochip at $51.8 together with further potential earnout of $25 million, the company has received private funding of $110 million since 2005.
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