SiRF and CSR to Merge

February 10, 2009  - By
Image: GPS World

SiRF Technology Holdings, Inc., based in San Jose, California, and CSR plc, formerly Cambridge Silicon Radio, headquartered in Cambridge, UK, will merge in a stock-for-stock transaction to create a new company, which will automatically assume a competitive/leading position in global connectivity and location markets. The companies expect the transaction to close in the second quarter of 2009.

“Financially, strategically and commercially, this is a compelling transaction,” stated Joep van Beurden, CEO of CSR — and analysts would almost universally agree. SiRF has been under the financial microscope since troubles surfaced in Q1 2008, and speculation about an acquisition had been rife.

Further, SiRF has been locked in a patent battle with Broadcom, the latter involved through its July 2007 acquisition of Global Locate.

CSR has made its mark in the Bluetooth connectivity sector, combining multiple connectivity technologies, while SiRF has long pioneered GPS location with multifunction system-on-chip (SoC) location platforms for consumer handhelds and cell phones. In January 2007, CSR purchased GNSS software receiver innovator NordNav.

For the moment, Qualcomm CDMA sits on the sidelines, but a significant and long-going market battle continues between (now) the big three in the mass market OEM GPS chip sector: Broadcom, Qualcomm, CSR — with Sony and Panasonic also quietly going about their business, primarily making GPS chips for their own brand devices, but certainly in a position to supply others, if they are not doing so already.

Based on CSR’s and SiRF’s results for fiscal year 2008, on a pro forma basis, the combined companies would have had sales of approximately $927 million. The combination will create the single largest pure play provider of integrated connectivity and location platforms and will be one of the top 10 fabless semiconductor companies in the world, according to a joint statement by the two. Customers of the combined company include four of the top five handset manufacturers, the top five personal navigation device makers, the top two auto-telematics suppliers, and other leading auto and consumer electronics providers. CSR and SiRF will have design and customer support centers around the world.

Under the terms of the agreement, SiRF stockholders will receive 0.741 of a CSR share for each share of SiRF common stock they own. Based on the closing stock price for CSR on February 9, this consideration would be equivalent to $2.06 of CSR stock for each SiRF share, representing total consideration of $136 million. This represents a premium to SiRF stockholders of approximately 91% over SiRF’s closing stock price on February 9. On closing of the transaction, SiRF stockholders are expected to own approximately 27% and CSR shareholders are expected to own approximately 73% of the combined company. The transaction is expected to be tax-free for SiRF stockholders.

SiRF, listed on the NASDAQ exchange, generated revenues of $232 million in 2008, and had gross assets of $195 million as of December 27, 2008.

CSR is listed on the London Stock Exchange. CSR’s customers include industry leaders such as Audi, Ford, LG, Motorola, NEC, Nokia, Panasonic, RIM, Samsung, Sharp, Sony, TomTo,m and Toshiba. CSR has its headquarters and offices in Cambridge, UK, and offices in Japan, Korea, Taiwan, China, India, France, Denmark, Sweden, and both Dallas and Detroit in the USA.

According to the companies, the transaction proffers the following benefits to both the companies themselves and their stockholders:

Combined Product Roadmap for Next-Generation Chips. The combined company will have significant R&D resources to deliver a broader portfolio of location and connectivity solutions to customers. R&D efforts will continue to support each company’s existing product lines and will also be focused on the delivery of additional multifunction radio chips, which combine CSR’s Bluetooth and other connectivity capabilities with SiRF’s GPS and GNSS technologies.

Growing Market Opportunities and Revenue Synergies. The combined company will benefit from significantly increased scale to meet the demand for both connectivity and location services in a broad range of products spanning mobile phones, automobiles, personal computers, mobile Internet devices, digital cameras, mobile gaming, and other consumer electronics products. The companies expect to achieve significant additional revenue synergies beginning in 2010 and beyond through a combination of cross-selling opportunities, deeper penetration of existing customers, new product offerings combining complementary technologies, and access to new markets.

Financial Synergies. The companies expect that annual cost synergies of at least $35 million in savings from gross margin improvements and reduced R&D, sales and marketing, and overhead costs can be achieved through steps that can be implemented within 60 days post completion of this transaction.

Financial Strength and Flexibility. The combined company is expected to have a strong balance sheet and cash position. At the end of fiscal year 2008, on a pro forma basis, the combined company had $378 million in cash and no bank debt.

Following the close of the transaction, CSR’s board of directors will be expanded to add two members of the SiRF board, interim CEO Dado Banatao and co-founder and VP of marketing Kanwar Chadha. Van Beurden will lead the combined company as CEO with the remaining leadership to be comprised of executives from both SiRF and CSR. The combined company will be headquartered in Cambridge (United Kingdom), and SiRF’s San Jose, California, headquarters will become the headquarters for CSR’s U.S. operations.

The transaction is subject to regulatory approvals and the approval of SiRF and CSR shareholders.

More information can be found at

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