Audio solutions provider DTS Inc. has agreed to be acquired by Tessera Technologies in a cash deal valued at approximately $850 million.
Tessera, which develops imaging and semiconductor packaging and bonding technologies, is paying $42.50 per share for DTS, whose technology is integrated in more than 2 billion devices globally, used in immersive sound systems in cinemas and put to use by video and music streaming services. The price tag represents a 28 percent premium to DTS' 30-day volume weighted average price.
The combined company is projected to reach 2016 revenue of approximately $450 million, nearly half of which will come from product licensing. Tessera said the deal will immediately add to its earnings per share. It predicted $15 million in annualized cost synergies within the first 12 to 18 months following the closing of the transaction and revenue synergies "from the expansion of addressable markets and leveraging of complementary customer channels" and technologies.
"The transaction will combine market leading audio and imaging innovators with complementary products, technologies, customer channels and intellectual property assets to enable the creation of an expanded, integrated platform to invent the future of smart sight and sound," the companies said. "Upon completion of the acquisition, the combined company will be one of the world's leading product and technology licensing companies, with over 450 engineers focused on developing next-generation imaging, audio and semiconductor packaging technologies."
"Our acquisition of DTS' talented team and industry-leading products will represent a transformational step in the execution of Tessera's strategic vision, with exciting new product development and marketing opportunities," said Tom Lacey, Tessera CEO. "Our complementary technology portfolios are ideally suited to deliver the next generation of audio and imaging solutions to mobile, consumer electronics and automotive markets while expanding our ability to address incredible new opportunities in Internet of Things and augmented reality/virtual reality."
Closing of the transaction is expected by late in the fourth quarter of 2016 or early in the first quarter of 2017, subject to regulatory approval as well as the approval of DTS' stockholders and other customary closing conditions.