Irvine and Milpitas, CA – Intersil Corp. has acquired Elantec Semiconductor Inc. in a $1.4B cash/stock deal.
Intersil, a provider of wireless networking and high performance analog systems, expands into additional high growth analog markets (optical storage and FPD) with this acquisition.
Under the terms of the agreement, Elantec shareholders will receive 1.24 shares of Intersil stock and $8.00 in cash for each Elantec share. Based on Intersil’s closing price of $36.65 per share on March 8, the implied transaction exchange ratio is 1.458 shares of Intersil stock for each Elantec share. This implies a transaction equity value of approximately $1.4 billion and a 15% premium to the 30-day average exchange ratio of Elantec and Intersil stocks.
The transaction combines two firms that are in some of the fastest growing markets in the semiconductor industry. Elantec, a provider of high performance analog ICs, is the leader in the high growth optical storage (CD read/write & DVD recordable) and flat panel display markets. Intersil and Elantec share a significant number of customers and have complementary product portfolios. In addition, both companies share a fundamental vision of providing system level value for their target markets. Elantec will be the third acquisition for Intersil, having previously acquired two wireless companies.
Both companies operated profitably during the 2001 downturn, and exited the year with gross margins in excess of 50 percent and significant cash balances. Intersil and Elantec outperformed the overall semiconductor industry in 2001 while investing a combined 22% of sales in new product development for some of the fastest growing markets. Intersil expects the acquisition to result in cost savings through the consolidation of the two companies. With these cost savings and excluding the impact of amortization expenses, Intersil expects the acquisition to be accretive to its 2003 earnings per share.
Upon the close of the transaction, Greg Williams, Intersil president and CEO, will serve as Executive Chairman of the Board of Directors, working on corporate, wireless and analog strategy. Rich Beyer, Elantec president and CEO, will become president and CEO of Intersil. Beyer and current Elantec Chairman Jim Diller will join Intersil’s Board of Directors.