Tessera Technologies to buy DTS of Calabasas for $850 million
Tessera Technologies Inc., a San Jose semiconductor company, said it was buying DTS Inc., a Calabasas maker of audio technology, for about $850 million in cash.
The deal, announced Tuesday, gives Tessera access to DTS’ audio products, which are used in mobile devices, home theater systems, cinemas and automobiles. DTS’ technology is employed in 2 billion devices worldwide.
Tessera specializes in licensing technology, such as imaging, to the mobile computing and communications industries.
Efficiencies from combing the two companies are expected to help save $15 million in costs within the first 12 to 18 months. Tessera expects 2016 revenue of about $450 million as a result of the transaction, compared with $273.3 million in 2015.
Tessera shares climbed 5.4% to $35.28 on Tuesday. DTS shares soared 23% to $42.24. The deal valued DTS shares at $42.50, a 28% premium to DTS’ 30-day volume-weighted average price as of Monday, the companies said.
“This is an exciting transaction that provides substantial and immediate value to our shareholders,” Jon Kirchner, chairman and chief executive of DTS, said in a statement.
DTS has 484 employees but declined to say if any would be let go. Tessera has over 250 employees, though the company did not say what effect the deal will have on its workforce.
“The combined company is expected to generate significant free cash flow that will provide flexibility to retire debt, fund quarterly dividends, explore [merger and acquisition] opportunities, and continue investments into its business units,” the companies said in a joint statement.
The combined company will receive a new name and stock symbol after the completion of the transaction, which take place as soon as the fourth quarter.
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UPDATES:
5:15 p.m.: This article was updated to include a statement on employment from Tessera officials.
The original article was published at 4:35 p.m.
