Intersil Acquires Elantec in $1.4B Deal

By Ryan Naraine

March 11, 2002

The WLAN chipset maker said the cash and stock deal is part of a move to expand into high-growth analog markets.

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  • WLAN chipset maker Intersil Corporation on Sunday announced the acquisition of Elantec Semiconductor in a deal worth about $1.4 billion.

    The Irvine, CA-based Intersil, which provides system-level services for the wireless networking and communications analog markets, said the cash and stock deal is part of a move to expand into high-growth analog markets.

    Under terms of the transaction, Elantec shareholders will receive 1.24 shares of Intersil stock and $8.00 in cash for each Elantec share. Based on Intersil's closing price of $36.65 per share on March 8, 2002, the exchange ratio is 1.458 shares of Intersil stock for each Elantec share.

    Intersil said the deal, which was driven by the increase demand for wireless products, was valued at approximately $1.4 billion and represents a 15 percent premium to the 30-day average exchange ratio of Elantec and Intersil stocks.

    Intersil CEO Greg Williams would serve as executive chairman of the board of the combined entiry. He will concentrate on corporate, wireless and analog strategy while Elantec's chief executive Rich Beyer will become president and CEO of Intersil.

    The transaction is the third acquisition for Intersil, which previously acquired two wireless companies. Elantec, a provider of high performance analog ICs, is a player in the optical storage (CD read/write & DVD recordable) and flat panel display markets.

    "Intersil and Elantec share a significant number of customers and have complementary product portfolios. In addition, both companies share a fundamental vision of providing system level value for their target markets. Elantec will be the third acquisition for Intersil, having previously acquired two wireless companies," the companies said in a statement.

    Intersil chief financial officer Dan Heneghan said the combined firm would have a solid balance sheet, with greater than $550 million in cash after the Transaction and no debt.

    Intersil, which is partnering with enterprise networking leader Cisco Systems Inc. to develop high-speed WLAN client adapter reference designs that comply with the 802.11g standard, said it operated profitably during the 2001 downturn, adding that demand for its products "is accelerating with orders running above expectations in each of our product lines."

    "In addition to the compelling strategic opportunity, Intersil expects the acquisition to result in cost savings through the consolidation of the two companies. With these cost savings and excluding the impact of amortization expenses, Intersil expects the acquisition to be accretive to its 2003 earnings per share," the company said.

    Intersil, which focuses on high data rate wireless connectivity, power management and wireless and wired communications infrastructures, said the purchase adds Elantec's expertise in analog optical storage and flat panel Displays. "In addition, Elantec's product offerings in communication ICs and standard analog will strengthen Intersil's portfolio of analog ICs."

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