Dialog has bought SiTel Semiconductor of the Netherlands which makes chips for short-range wireless, digital cordless and VoIP technology. Dialog paid $86.5m net of cash for SiTel which has 140 employees. Dialog funded the purchase from its cash reserves.
"We see the acquisition as highly complementary to our existing business and it will allow Dialog to address adjacent emerging connectivity markets in a compelling way," says Dr. Jalal Bagherli, CEO of Dialog Semiconductor.
Rationale for the move is to add short-range wireless connectivity and VoIP to Dialog's existing technology portfolio, add major global customers in the portable device market, and significantly expand Dialog's addressable market by targeting high growth wireless personal portable devices.
SiTel is an established, cash-generative and profitable business with unaudited 2010 revenue of $116.9m, of which approximately 90% were standard products. It has an enterprise value of $86.5m, net cash of $84.5m and the acquisition is expected to be accretive in Q3 2011
SiTel’s product portfolio addresses a broad range of personal portable applications including digital cordless phones, professional wireless headsets, gaming and portable medical devices.
SiTel's VoIP technology is increasingly used by leading manufacturers of enterprise and residential VoIP connectivity products.
The combination of SiTel's VoIP-based internet connectivity and short-range wireless capabilities provides a platform to enable a new generation of wireless smart home networked devices with direct IP addressability - a fast-emerging market segment.
"The acquisition adds an established team of nearly 100 engineers, including expertise in low power RF," says Bagherli, "Dialog now benefits from a differentiated technology portfolio and an extremely competitive platform for our customers, leveraging both our superior power management technology with low power short-range wireless technology."
As the trend for wireless connectivity in personal portable products continues, the market for proprietary and standards-based low power wireless ICs represents one of the highest growth opportunities in the semiconductor market today, with total units predicted by IMS Research to reach more than 4bn by 2015, representing a CAGR of 32.2% between 2010 and 2015.
In the financial year 2010 SiTel generated unaudited revenues of approximately $116.9 million (2009: $109.6 million) with a 42.4% gross margin.
SiTel's customers include Gigaset, Panasonic, Microsoft, Plantronics and LG Ericsson: each world-leading brand names in their respective market segments for portable personal consumer devices and VoIP connectivity.
SiTel was previously owned by the private equity firm HgCapital.