RF Micro Devices buys in to Sirenza

16 August 2007

RF Micro Devices Inc. has agreed to buy Sirenza Microdevices Inc., for $900 million in cash and stock, in a move by the wireless telecom chipmaker to enter more profitable markets.

The deal is seen to synergise a lot between the two companies, with not much overlap. Sirenza's addition, which is a Broomfield, Colo.-based publicly held manufacturer of chips for cellular base stations, effectively completes RF Micro's product portfolio for wireless gear. It also marks a change of strategy for Greensboro, N.C.-based RF Micro.

Of late, Sirenza has enjoyed strong growth. In the second quarter, revenue rose to $46.7 million, up from $39 million a year-ago, while net income increased to $2.8 million, up from $2.1 million.

Last year, Sirenza's sales more than doubled, to $136.6 million, in part reflecting its acquisition of chipmaker Micro Linear Corp. for $45.6 million. Net income last year jumped to $6.8 million, from $1.4 million.

RF Micro's offer for Sirenza values it at about 5 times of its projected 2007 revenue. Although there have been few other recent acquisitions in the chip industry, some analysts described the price as expensive, noting that other wireless equipment companies trade at about 3 times 2007 revenue.