* Deal worth $471 mln including shares already held by
* Offer of $12.50/shr at 62.5 pct premium to Thursday's
* Murata expects deal to strengthen its radio frequency
* Expects deal close by end-2014 or early 2015
(Adds analysts' comments, details)
By Lehar Maan
Aug 22 Japan's Murata Manufacturing Co Ltd
said it would buy the part of U.S. radio frequency
chipmaker Peregrine Semiconductor Corp it does not
already own for $465 million in cash, as it looks to strengthen
its RF business.
The $12.50 per share offer is at a premium of 62.5 percent
to Peregrine's Thursday close of $7.69.
The high premium is the result of a competitive bidding
process, RBC Capital Markets analyst Douglas Freedman said.
Peregrine's stock rose as much as 62 percent to $12.43,
making it the biggest percentage gainer on the Nasdaq.
Murata Manufacturing is one of the world's biggest makers of
ceramic capacitors - tiny parts that control the flow of
electricity in a variety of products, including TVs, car engine
controls and gaming consoles.
It is also one of Peregrine's top customers and sources most
of its RF switch requirements from the U.S.-based company.
"Murata ... is trying to get into more sophisticated
products and they need the parts that PSMI builds," Charter
Equity Research analyst Edward Snyder told Reuters.
"If PSMI disappeared, they (Murata) would lose their source.
Therefore, it makes sense they would buy PSMI," he added.
Peregrine has posted a loss five times in the eight quarters
since it went public in August 2012. Peregrine's revenue has
fallen 25 percent since touching a record high of $63 million in
the quarter ended December 2012.
When asked if rival bidders could enter the fray, JMP
Securities analyst Alex Gauna speculated that chipmakers such as
Qualcomm Inc, Intel Corp, Skyworks Solutions
Inc and MediaTek Inc could also bid for
The deal will give Murata Electronics North America Inc, a
wholly owned unit of Murata Manufacturing, access to Peregrine's
intellectual property rights on RF silicon on insulator (SOI)
SOI technology uses layers of silicon as insulation to
improve the performance of chips used in smartphones and other
Increasing demand for internet connectivity on the move is
driving sales of tablets and smartphones, which use more RF
The number of smartphone users worldwide is expected to grow
from 6.8 billion in the first quarter of 2014 to 9.2 billion by
the end of 2019, according to a study by telecom network
equipment maker Ericsson. (bit.ly/1kFCEeD)
Including Peregrine's outstanding shares already held by
Murata Electronics, the deal is valued at $471 million and is
expected to close by the end of 2014 or early 2015.
Deutsche Bank and Evercore acted as financial advisers to
Peregrine, while Mitsubishi UFJ Morgan Stanley was financial
adviser to Murata.
(Reporting By Lehar Maan and Supantha Mukherjee in Bangalore;
Editing by Simon Jennings)