* UK-based CSR says it is considering options
* CSR has attractive niche in Internet of Things
* Microchip has until Sept. 25 to make firm offer
* CSR shares leap 36 percent
(Adds Microchip response)
By Paul Sandle
LONDON, Aug 28 Britain's CSR has
rebuffed an approach from Microchip Technology, saying
that the undisclosed price proposed by Microchip was not enough
if its U.S. rival wants to bolster its role in the "Internet of
Things" with the chipmaker's radio technology.
"The price proposed by Microchip has been rejected and the
board is considering its options for the company," CSR said in a
short statement on Thursday.
Shares of CSR, which had fallen 9 percent in the year to
date, closed up 36 percent to 780 pence, valuing the company at
1.3 billion pounds ($2.2 billion).
CSR, short for Cambridge Silicon Radio, specialises in
connectivity. Its chips are used in products such as speaker
docks and Apple-owned Beats headphones.
It recently developed smarter Bluetooth technology that
connects multiple devices in the home, enabling people to
control lighting and heating using a smartphone, an example of
the "Internet of Things".
CSR's role in the developing sector makes it an attractive
target for larger chipmakers that are seeing fewer opportunities
for growth in smartphones.
Microchip, which makes memory and analogue chips, confirmed
in a statement late Thursday that it has held talks with CSR.
"The discussions between the parties are at a very
preliminary stage and there can be no certainty that an offer
will be made," Microchip said.
Analysts said that a purchase of CSR could cost Microchip
nearly 10 times the $328.5 million that it agreed to pay to buy
Taiwanese wireless product maker ISSC Technologies Corp in May.
Alex Jarvis at Peel Hunt, the top-rated analyst covering the
stock, said CSR was one of her key picks as a takeover target.
"Firstly, it's about large vendors finding profit centres
outside handsets, and secondly it's about part of the
convergence towards Internet of Things, focusing on big areas
like home entertainment and automation, and that trend happening
in automotive as well," she said.
CSR's chief executive, Joep van Beurden, has been shifting
the company's focus to more profitable areas such as music,
audio and automotive, with less reliance on products like
He sold CSR's mobile phone technology business, where it was
losing ground to rivals like Qualcomm, to Samsung
Electronics Co two years ago for $310 million.
Jarvis said the turnaround has put CSR in a relatively
strong position, and its favourable UK tax rate also made it an
attractive target for U.S. companies.
CSR issued the statement after the Financial Times, in a
report on its website, said the company was talking to a
potential suitor about a deal that could value it at about $3
Jarvis said a price of around 11 pounds a share, valuing the
company at about $3 billion, would be "not out of kilter".
Under British takeover rules, Microchip has until Sept. 25
to either announce a firm offer for CSR or walk away.
Microchip's shares closed up 0.8 percent at $48.02 on the
J.P. Morgan Cazenove is advising CSR.
($1 = 0.6030 British Pounds)
(Additional reporting by Karen Rebelo; Editing by Neil
Maidment, Tom Pfeiffer and Leslie Adler)