* To pay $18.50/shr cash for Techwell
* Intersil gets $390 mln loan commitment
* Deal to add to Intersil's 2010 adjusted earnings
* Techwell shares jump 48 pct
(Recasts, adds analyst comments, background)
By Deepti Govind
BANGALORE, March 22 Chipmaker Intersil Corp
ISIL.O said it agreed to acquire Techwell Inc TWLL.O for
about $370 million, or $18.50 per share, to expand in the
high-growth security surveillance and automobile infotainment
The offer price comes at a premium of nearly 49 percent to
Techwell stock's Friday close.
The acquisition will significantly increase Intersil's
overall industrial business, which will become its largest
end-market at about 31 percent of revenue, Intersil Chief
Executive Dave Bell said.
"Intersil has stated a goal of getting to a $1 billion
run-rate by the end of next year and this deal gets them half
the way there," said Jefferies & Co analyst Blayne Curtis.
Intersil has been actively buying companies over the past
two years and has made four acquisitions in 2008 and 2009,
according to Thomson Reuters data.
"They've been fairly acquisitive, most of small deals
trying to add different growth drivers, and I would expect them
to continue down this path," Curtis, who rates Intersil stock
at "underperform," said.
The deal is expected to add to Intersil's 2010 adjusted
earnings, it said in a statement.
"The deal is modestly accretive with very little synergies.
So I am not sure that it materially changes the Intersil
story," Curtis said, adding that Techwell does add some upside
potential in new growth areas, but also adds the execution
risks that come with M&A deals of this size.
Techwell, which makes chips to convert analog video signals
to digital form, has more than 200 employees in the United
States, China, Japan, South Korea and Taiwan.
"Part of their whole strategy is also to expand in Asia and
Japan and this fits the bill," said analyst Carlos Guillen at
Wall Street Strategies.
Guillen rates Intersil shares at "buy."
Intersil expects to finance the deal by issuing debt, and
has received a financing commitment of $390 million from Morgan
Stanley Senior Funding Inc.
Morgan Stanley is the financial advisor to Intersil on the
deal, while Deutsche Bank Securities is advising Techwell.
Shares of Techwell were up 48 percent at $18.38 in afternoon
trade. They earlier touched $18.45, their highest in more than
Intersil shares were down 15 cents at $15.18 in afternoon
trade Monday on Nasdaq.
(Reporting by Deepti Govind; Editing by Gopakumar Warrier)