Qualcomm Inc, the biggest maker of mobile-phone chips, has agreed to buy U.K. chipmaker, CSR for £1.56 billion in order to expand into technology for connected appliances. The move comes two months after CSR rejected a bid from Microchip Technology.
The deal, recommended by CSR directors, values the Cambridge-based company at about 19 times projected earnings, compared with 16.7 times paid for chipmakers over the past 12 months, according to data compiled by Bloomberg.
Qualcomm has been building up its business for the so-called Internet of things and the CSR acquisition is a sign that the semiconductor industry is becoming more focused on making chips for devices that can be controlled from a mobile phone.
To this end, Qualcomm bought Wilocity makers of Wi-Fi products in July and the company has also developed the AllJoyn platform, an open-source project that helps connected devices work together.
CSR, a pioneer in Bluetooth wireless technology, is benefiting as more gadgets connect to each other to exchange information and, for the last five years or so, it has been working on technology that connects devices to smartphones and the Web, Chief Executive Officer Joep van Beurden said in a recent interview.
“You can see the strategic complement between Qualcomm and CSR — they are the global leaders in silicon for smartphones,” Van Beurden said.
The acquisition is expected to be completed by the end of summer 2015. It will add to earnings per share in fiscal year 2016, the first full year after the companies combine, Qualcomm said.