* To also assume debt of about $85 million
* Sees Q4 adj EPS $0.20-$0.24 vs est $0.32
* Shares down 8 pct
(Recasts; adds deal and conference call details, analyst
comment; updates share movement)
By Siddharth Cavale
Jan 10 Chipmaker Standard Microsystems Corp
SMSC.O said it would acquire Conexant Systems Inc CNXT.O
for about $200 million in a cash-and-stock deal, to strengthen
its foothold in the automotive and industrial markets.
The Hauppauge, New York-based company also forecast a weak
fourth-quarter profit on inventory build-up, sending its shares
down 8 percent.
SMSC, which makes chips that help PCs communicate with
keyboards and external drives, will assume Conexant's net debt
of about $85 million. Conexant shareholders will get $1.125 per
SMSC share in cash and $1.125 in stock.
The total cash consideration is about $98 million and SMSC
will issue 2.9-3.6 million shares, the company said.
"I think this is a fair deal and as the pool of buyers is
really limited, I am not expecting any topping offers,"
Jefferies analyst Blayne Curtis said.
The technology sector is seeing a return of mid-sized deals
as companies eye niche firms for growth.
The analyst added that given Conexant had scale and debt
problems, "being part of a larger organisation will definitely
benefit it," Jefferies' Curtis said.
"I still expect to see technology acquisitions in the
$50-$200 million range by some of the consolidators such as
Broadcom BRCM.O and Marvell Technology (MRVL.O)."
SMSC said it expects the deal to add to adjusted earnings
per share, gross margins and operating margins. It also sees
annual pre-tax cost synergies of $8-$10 million in the fourth
quarter of fiscal 2012.
SEES WEAK Q4
The company reported third-quarter earnings that beat
market expectations, but forecast a weak fourth quarter.
Sales at its industrial segment, which caters to
high-profile clients like BMW (BMWG.DE) and Audi (NSUG.DE), are
expected to drop 20 percent on inventory correction. Consumer
sales will decline slightly due to weakness in video-related
products, Chief Executive Christine King said on a conference
call with analysts.
The company sees fourth-quarter earnings of 20-24 cents a
share, excluding items, on revenue of $96-$99 million.
Analysts on an average expect SMSC to earn 32 cents a
share, excluding items, on revenue of $99.1 million, according
to Thomson Reuters I/B/E/S.
SMSC's shares, which have gained 32 percent since reporting
second-quarter results on Sept. 28, were down $2.55 at $27.19
in mid-day trade on Nasdaq.
Shares of Conexant were up 15 percent at $2.17 on Nasdaq.
(Reporting by Siddharth Cavale in Bangalore; Editing by Roshni