Why Synaptics, Incorporated Shares Soared Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Synaptics, Incorporated (NASDAQ: SYNA  ) rose 11% Wednesday following news that the touchscreen-solution specialist is in talks to acquire another smartphone chipmaker.

So what: Citing sources familiar with the situation, Reuters states that Japan-based Renesas Electronics is planning to sell its majority stake in Renesas SP Driver to Synaptics. Reuters also noted that Apple had previously held talks to possibly purchase Renesas SP Driver -- which makes sense considering it's the sole supplier of iPhone display driver chips -- but those talks fell through.

Renesas, for its part, wants to divest the stake to "shed non-core assets" and place greater focus on its auto sector customers.

Now what: At the right price, the deal could add significant value for Synaptics to further bolster its competitive position supplying chips for the massively popular line of devices coming out of Cupertino. Keep in mind, however, that Japan's Sharp and Taiwan's Powerchip collectively hold the remaining 45% stake in Renesas SP Driver. Nonetheless, shares of Synaptics do look reasonably priced at less than15 times next year's expected earnings, so it could be worth a look even if this acquisition falls through.

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Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

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Related Tickers

8/28/2015 4:00 PM
SYNA $71.01 Down -0.10 -0.14%
Synaptics, Inc. CAPS Rating: ****