Picochip is to be acquired by Californian network chip firm Mindspeed Technologies.
The Bath-based mini-basestation chip maker has signed a deal to be bought for around $51.8m, plus a potential earn-out payment of up to $25m payable in the first calendar quarter of 2013.
"It is a great strategic fit for several reasons," said Raouf Halim, CEO of Mindspeed (pictured). "First, it positions Mindspeed as the clear leader in small cell base station technology with the industry's broadest small cell product offering. Second, it enhances our competitive position as we join our respective 3G/4G technologies to offer single- and multi-mode solutions. Third, it gives us the scale to lead the industry's move toward fixed/mobile broadband convergence."
For Picochip, Mindspeed will pay cash of $27.5m and approximately 5.19 million in new shares of Mindspeed common stock, amounting to approximately 15% of outstanding Mindspeed shares, for a total of $24.3m, based upon the closing price of Mindspeed's common stock yesterday.
The cash portion of the initial purchase price will be financed in part with bank debt.
Include in the terms is an earn-out provision, whereby the purchase price
can increase by up to $25m, contingent on the achievement of certain milestones.
The earn-out may be paid in cash, Mindspeed common stock or a combination thereof, at Mindspeed's discretion.
The transaction has been approved by both boards of directors, subject to certain closing conditions.
Closure is expected in the first calendar quarter of this year.