UPDATE 1-Chinese state-owned firm offers to buy chipmaker Montage

Mon Mar 10, 2014 9:57am EDT

March 10 (Reuters) - A Chinese state-owned company offered to buy Montage Technology Group, a Shanghai-based chipmaker, in a deal valued at about $600 million, roughly four months after failing to buy rival RDA Microelectronics Inc .

Shanghai Pudong Science and Technology Investment Co Ltd offered $21.50 per Montage share in cash, a 25 percent premium to the company's closing price on Friday.

Shares of Montage, which counts Intel Corp among its top shareholders, were up 19.5 percent at $20.51 in early trading on the Nasdaq.

The fabless chipmaker, which went public at $10 per share in September, makes analog and mixed-signal chips for set-top boxes and servers for cloud computing, and counts the world's four largest DRAM chipmakers as its customers.

Topeka Capital Markets analyst Suji De Silva said it was difficult to predict if there would be rival offers since Montage was not a cellphone-focused chipmaker, unlike RDA and Spreadtrum Communications Inc.

"But the price seems low, so there could be chance of topping up," De Silva said.

China, home to the largest number of mobile phone users in the world, is investing heavily to improve its broadband infrastructure.

That was one reason Shanghai Pudong Science, owned by the Pudong New Area government of Shanghai, offered to buy RDA in September. But its offer was topped by Tsinghua University-funded Tsinghua Unigroup Ltd with a bid of $910 million.

Tsinghua also said in July it would buy Spreadtrum for a raised offer of about $1.78 billion.

Montage last month came under fire from short-seller Gravity Research which said the company's revenue was "significantly lower" than reported, and that one of its largest distributors was "nothing more than a shell company." (ttp://link.reuters.com/vax66v)

Montage has refuted the allegations.

The company, which had 28 million shares outstanding as of Dec. 31, counts Samsung Electronics and Micron Technology Inc among its customers.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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