One minute it’s the Bridge of Sighs, next they’re breaking open the bubbly in Cambridge
Just before Christmas you could have bought shares in struggling UK chipmaker CSR for just 154p.
But today they’ll cost you almost double thanks to a deal to transfer its handset connectivity and location technology to Samsung Electronics.
The news sent CSR’s shares soaring by a massive 30% on the London Stock Exchange today as it was revealed it will get $310 million in cash, but will still retain revenues from its existing handset products.
As part of the deal some 310 associated staff will also be transferred to Samsung who, additionally, will pay $34.4 million for a 4.9% stake in CSR.
Another boon for shareholders is that they’ll benefit from a return of up to $285 million of surplus capital, including $40.5 million that’s outstanding under a buy-back announced in February 2012.
In future CSR believes it will be able to achieve higher gross margins through its tie-up with Samsung as well as operating in more attractive growth markets.
Adding to the celebrations is the fact that CSR expects to report second-quarter revenues at the top end of the previously announced guidance range of $245 – $265 million and remains on track to deliver full-year revenue in line with market estimates.
For its part, Samsung’s expects to strength its components business with the deal giving the Korean manufacturer control of CSR’s development operations in WiFi and Bluetooth connectivity components, as well as in chips giving access to satellite positioning systems.
Around 21 associated US chip patents will be transferred from CSR to Samsung, giving it a perpetual, royalty-free licence.
In the first quarter of this year Cambridge-based CSR suffered a widening loss of $16.6m while its shares have lost nearly half their value since the beginning of last year, leaving it with a market capitalisation of £434m ($680m).
The company’s $484m takeover of US chipmaker Zoran last year is thought to be largely to blame having met with widespread shareholder opposition, though the declining fortunes of key customers such as Research In Motion and Nokia haven’t helped.