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Shanghai-based fabless semiconductor company Spreadtrum Communications (NASDAQ: SPRD ) is getting bought out.
On Friday, Spreadtrum announced that a subsidiary of China's state-owned Tsinghua Holdings Co. Ltd. has agreed to pay $31 for each outstanding American Depositary Share, and $10.33 for each China-floated ordinary share, to acquire the company. In total, the buyout price is approximately $1.8 billion.
On $720 million in annual revenue, the buyout price values Spreadtrum shares at approximately 2.5 times sales, or 20x earnings. As such, it represents a premium to where the shares were trading prior to its announcement (and indeed, to the $29.85 share price of the ADS today), but a discount to the valuation at rival semiconductor companies such as Infineon and Texas Instruments.
Spreadtrum's Board of Directors has unanimously approved the buyout proposal, and will be recommending that its shareholders vote in favor of it.
Spreadtrum specializes in the manufacture of chips for 2G, 3G, and 4G mobile electronic devices.