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.
The article Silicon Labs Buying Energy Micro originally appeared on Fool.com.Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Silicon Laboratories. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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