(Adds share movement, details, background)
By Soham Chatterjee
July 7 Touchscreen chipmaker Atmel Corp
said it would buy Newport Media, a maker of low-power Wi-Fi and
bluetooth gear, for $140 million to gain ground in a technology
that helps connect everything through the Internet.
Atmel's shares were down 1 percent in early trading on
With the deal, the chipmaker joins a list of semiconductor
companies that are acquiring technologies to position themselves
for the trend known as the Internet of Things (IoT).
"Low-Power Bluetooth was a technology Atmel planned on
buying or building during CY14," Feltl & Company analyst Jeffrey
Schreiner told Reuters.
The technology adds to the company's product base which
supports IoT, Schreiner added.
Atmel said its chips paired with Newport's gears can be used
in a variety of products ranging from home and building
automation equipments to consumer devices that require longer
A growing number of companies - including Google Inc
, Apple Inc, Qualcomm Inc, and
Microsoft Corp - are working alone or in groups to
promote protocols for how smart devices should work together.
Tech companies such as Qualcomm believe the quick
establishment of standards across home-connected gadgets, cars
and wearable computing devices will accelerate the introduction
of new devices by manufacturers.
The deal includes an additional earn-out of up to $30
million which is to be paid if future revenue thresholds are
achieved over the next two years. The chipmaker expects the deal
to add to its adjusted financials in the second half of 2015.
"With the deal being dilutive for a year or more, it
suggests to us that opportunities for IoT based revenues within
Atmel are likely more long-term in nature," Schreiner added.
Schreiner, who expects IoT product volumes ramping up in
2017-2018, said the purchase price is "somewhat expensive".
Atmel said it would fund the deal with cash on hand and
borrowings under its existing credit facility. The transaction
is expected to close in the third calendar quarter.
Newport Media reported revenue of $43 million for 2013,
Atmel said in a statement.
(Additional reporting by Lehar Mann; Editing by Saumyadeb