Silicon Labs Buying Energy Micro


Austin, Texas-based Silicon Laboratories , which chose a new chief financial officer last month, has now found him a bit of extra work to do.

On Friday, Silicon Labs announced that it has signed an agreement to buy Norway's Energy Micro AS, a privately held maker of power-efficient 32-bit microcontrollers and multi-protocol wireless RF solutions using ARM architecture.

Silicon Labs will pay $115 million upfront to acquire Energy Micro, plus an additional $55 million later as deferred and "earn-out" consideration if the business grows as planned. With Energy Micro expected to produce $7 million in revenues in H2 2013, this works out to a total price-to-sale ratio of approximately 13.6 that Silicon Labs is paying -- a steep premium to the buyer's own 3.1 P/S ratio.

In a statement, Silicon Labs defended the purchase price, saying the acquisition "accelerates [its] growth opportunities and positions the company as the foremost innovator in energy-friendly embedded solutions." Silicon Labs also believes that the deal will be accretive to earnings "on a non-GAAP basis by the end of 2014." The acquisition is slated to close next month.

Editor's note: A previous version of this article incorrectly stated the upfront cost of this deal. The figure has been corrected. The Fool regrets the error.


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