Qualcomm (NASDAQ:QCOM) said it agreed to buy British Bluetooth chipset specialist CSR for £1.56 billion ($2.49 billion), giving it a leg up in the connect car and Internet of Things markets, which are set to grow substantially.
Qualcomm said the deal will give it access to CSR's products, channels and customers in the IoT and automotive infotainment markets. Qualcomm added that CSR's board accepted a cash offer of 900 pence a share, which is almost a 57 percent premium on CSR's share price on Aug. 27. CSR rejected a takeover bid from Microchip Technology in August. CSR's deal with Qualcomm is expected to close by the end of the summer of 2015.
The deal is another signal that Qualcomm wants to make sure its chips have a strong presence not just in smartphones and tablets but in wearables, connected home appliances and cars. "Clearly they have gone down the 'buy' rather than 'make' route," Jefferies analyst Lee Simpson wrote in a research note, according to Bloomberg. "This does appear to fit in with their recent strategic moves."
CSR, which is short for Cambridge Silicon Radio, was a pioneer in Bluetooth and its silicon is in portable audio speakers and Apple-owned (NASDAQ: AAPL) Beats headphones.
This is just the latest acquisition Qualcomm has made to bolster its position in what it thinks are high-growth areas. In July the silicon giant confirmed its acquisition of WiGig chipmaker Wilocity, a move designed to enable Qualcomm to easily integrate the 60 GHz Wi-Fi technology into its mobile platforms and secure the vendor's role in wireless streaming of 4K video and high-throughput peer-to-peer communications for mobile, computing and networking devices.
CSR CEO Joep Van Beurden told the Wall Street Journal that the deal merges Qualcomm's strengths in smartphones and traditional wireless connectivity with CSR's focus on connected devices. "In the future, you're going to connect basically everything and everybody to your smartphone," he said.
"If you look at us, we are focused on all the accessories around the phone," he told Reuters. "In voice and music, we are strong in headsets, soundbars and speaker docks; and we are strong in cars, which more and more are an extension of the phone with infotainment."
Carriers, platform companies and chipset providers are turning to the connected car as a major growth market in the next few years. Indeed, the connected car market is expected to grow to $20 billion in annual revenue by 2018 from $8 billion in 2013, according to research firm Juniper Research. Meanwhile, research firm IDC thinks the worldwide market for IoT solutions will grow from $1.9 trillion in 2013 to $7.1 trillion in 2020.
- see this release
- see this WSJ article (sub. req.)
- see this Reuters article
- see this Bloomberg article
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