Sirf Technology, the troubled supplier of chips and software used in global position systems that has gone through three rounds of layoffs this year as its sales collapsed, said it has agreed to be acquired by CSR, a British supplier of Bluetooth connectivity tools.
Under the terms of the deal, Sirf shareholders will get roughly three-quarters of a share of CSR for each share of Sirf they hold. Based on the closing stock price for CSR of $2.06 one Monday, before the deal was announced, the deal was valued at about $136 million.
That represented about a 91 percent premium to where Sirf shares ended the day Monday at $1.08. Traders bid up Sirf shares by 60 cents, or 56 percent Tuesday , as 9.7 million shares traded, about seven times the average volume for the stock over the last year.
The combined company will be headed by CSR’s chief executive, Joep van Beurden. Sirf co-founder, chairman Dado Banatao — who returned as chief executive last year as the company hit the rocks — and fellow Sirf board member Kanwar Chadha will join Sirf’s board.
Sirf put out a an FAQ about the deal to its employees. The first question it imagined employees asking was: Who is CSR. Leaving aside the fact that its not a “who” but more like a “what”, we’re glad we weren’t the only ones who hadn’t ever heard of it before.
Question #6 was the inevitable: Will there be any layoffs as a result of the transaction?
As you can see in the press release, the companies expect a combination of CSR and SiRF will deliver significant cost savings from gross margin improvements and reduced R&D, sales and marketing and overhead costs. The companies expect that annual cost synergies of at least $35 million can be achieved through steps that can be implemented within 60 days post completion of this transaction.
Consequently, as in any combination of two companies, there will be some redundancy and a number of positions may be impacted by this transaction. However, we have only just begun to work through transition and integration planning, so it is too early to speculate on the details regarding any individual positions. All employees can expect fair, responsible, and timely communication of any changes.
It’s important to remember, however, that this transaction is about growth and opening new opportunities for our companies, and we believe that SiRF employees will benefit significantly by being part of a larger, dynamic and growing organization. In fact, over the long term, we believe that our combination with CSR will result in greater career opportunities for employees of both companies as we move forward and grow together.
Just how long the “long term” might be isn’t clear.