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Why Shares of Adesto Technologies Are Rocketing Higher

By Timothy Green - Feb 20, 2020 at 12:52PM

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The company has agreed to an acquisition.

What happened

Shares of Adesto Technologies (IOTS) soared on Thursday after the company announced that it would be acquired by Dialog Semiconductor PLC (DLGN.F). Adesto stock was up 54.8% at 12:20 p.m. EST, while Dialog stock had edged up 0.6%.

So what

Dialog has agreed to pay $12.55 per share in cash for Adesto, which works out to an enterprise value of about $500 million. Dialog will fund the deal with cash from its balance sheet.

A notepad drawing of a fish eating a smaller fish.

Image source: Getty Images.

Dialog expects to achieve annual cost synergies of $20 million within the first calendar year following the closing of the deal. The company also expects considerable revenue synergies due to "the complementary nature of the product portfolios and technology."

"Together with Dialog, we are positioned to create unique Industrial IoT solutions through the integration of our best-in-class technologies for today's increasingly connected world," said Adesto CEO Narbeh Derhacobian.

Now what

The transaction is expected to close during the third quarter of 2020, subject to shareholder and regulatory approval. The deal has been approved unanimously by Adesto's board of directors.

Since bottoming out in late 2018, the small-cap stock is now up about 130%.

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