Money Matters - Simplified

Samsung snaps CSR’s mobile technology for $310 million

Samsung will pay an additional $34.4 million for a 4.9 percent equity stake in order to boost ties with CSR.

In an attempt to give itself an edge in the global handset market, Samsung Electronics Co. will acquire the wireless technology unit belonging to British chipmaker company Cambridge Silicon Radio (CSR), it announced Tuesday.

In an all cash deal, the South Korean tech giant will gain access to CSR's facility which develops handset connectivity and location technologies used in smartphones and tablet computers for US$310 million (S$392 million).

The development team of over 300 CSR employees will join Samsung to work on its components division.

The acquisition will also include transfer of the company's portfolio of 21 US patents, including their respective international counterparts.

CSR’s intellectual property rights will provide Samsung with a buffer against threats from competitors and so-called "patent trolls".

"By leveraging CSR's research and development capability, Samsung will strengthen its application processor platform and solidify its position as a leading semiconductor solutions provider," said Stephen Woo, president of system LSI business, device solutions at Samsung.

The Korean manufacturer will also pay an additional $34.4 million for a 4.9 percent equity stake in order to boost ties with CSR which mostly makes Bluetooth, WiFi and GPS chips.

Both transactions are expected to be completed in the fourth quarter of 2012, subject to regulatory approvals and clearance from CSR shareholders.

CSR’s intellectual property rights will provide Samsung with a buffer against threats from competitors and so-called "patent trolls".

CSR climbs after Samsung mobile deal
The British semiconductor design company CSR was founded in 1998. The company which went public in 2004 employs around 2,500 people.

In 2011, CSR registered profits of $384million. However, the company listing on the London Stock Exchange has collapsed in the past two years after some of its main customers such as Nokia and RIM are hit with problems. Both are plagued with takeover rumours.

Following the deal, CSR will concentrate on its five high growth sectors of Voice & Music, Automotive Infotainment, Indoors Location, Imaging and Bluetooth Smart. It will focus on plans to attain higher margins and strive for a better overall market status.

The transaction is expected to result in rising earnings per share from next year. The chipmaker plans to return up to $285m to shareholders after sealing a deal with Samsung.

Price of CSR shares hit a 52-week high after the deal was announced, soaring to more than 40 percent in early trading today.

Joep van Beurden, chief executive of CSR, commented, "This transaction will accelerate our transformation into a higher gross margin platform company operating in attractive growth markets where we have a leading market position. As a result, we will be a more competitive, more differentiated and more profitable business.