This document analyzes Qualcomm's acquisition of Atheros Communications for $3.654 billion. Key details include:
- Qualcomm will pay $45 per share for Atheros, a 30.4% premium over Atheros' stock price.
- The deal value represents an EV/EBITDA multiple of 18.7x and EV/Revenue multiple of 3.15x for Atheros.
- Financial projections show the acquisition will be 1.4% accretive to Qualcomm's EPS without synergies, and 2.5% accretive with synergies factored in.
5. EXECUTIVESUMMARY
Target OverviewBuyer Overview
•Total deal value: $3,654 MM
•Total Enterprise Value/ 2011P EBITDA: 18.7x
•Total Enterprise Value/ 2011P Revenue: 3.15x
•FY 2011P P/E: 28.9x
•Offer Price per Share: $45.0
•Cash Consideration: 40%
•Premium: 30.4%
•EPS Accretion without synergy: +1.4%
•EPS Accretion with synergy: +2.5%
•% Shares owned by Qualcomm shareholders: 98%
Valuation
•Company: Qualcomm Inc.
•Headquarter: San Diego, CA
•CEO: Paul E. Jacobs
•Number of Employees: 17,500
•Engaged in the development, design, manufacture, and
marketing of digital wireless telecommunications products and
services based on code division multiple access technology
•Develops and supplies CDMA based integrated circuits and
system software for wireless voice and data communications,
multimedia functions and global positioning system products for
wireless device and infrastructure manufacturers
Key Financials of Buyer and Target
Buyer
• Ticker: QCOM
• Stock Price: $56.82
• 5 Year avg. Sales Growth: 15.0%
• Market Cap: $95.55B
• Number of Basic Shares: 1,617.7MM
• 2010 EBITDA: $3,949 MM
• Total Enterprise Value: $78.54B
Target
• Ticker: ATHR
• Stock Price: $34.50
• 5 Year avg. Sales Growth: 40.3%
• Market Cap: $3.27 B
• Number of Basic Shares: 73 MM
• 2010 EBITDA: $147 MM
• Total Enterprise Value: $2,686B
•Company: Atheros Communications Inc.
•Headquarter: Santa Clara, California
•CEO: Willy C. Shih, PhD
•Number of Employees: 1,778
•Developer of semiconductor system solutions for wired and
wireless communications products
•Combines its wireless systems expertise with high performance
radio frequency (RF), mixed signal and digital semiconductor
designs and provides highly integrated but low cost chipsets
7. TARGETOVERVIEW
Products and ServicesCompany Overview
Develops semiconductor system solutions for communicationproducts
that include solutions for wireless local area network (WLAN), mobile
WLAN, Ethernet, Bluetooth, global positioning system (GPS), and power
line communications
Offers reference designs used in designing networking cards and
routers, broadband gateways, mobile devices, and handsets and
provides single and multi-chipWLAN products, including wireless
networking products for personal computers (PCs) and small
office/homeoffice (SOHO) markets; and wireless infrastructure systems-
on-chip with network management capabilities for the enterprise
networking market
Atheros wireless system solutions are used in various applicationsin the
PCs, enterprise access, broadband gateway, SOHO networking,
consumer electronics, and mobile communicationsmarkets and Its
radio-on-chips for mobile solutions are used for WLAN in mobile devices,
such as smart phones and mobile consumer products
It’s ETHOS products comprise access points, routers, gateways,
Ethernet physical layer, transceivers, and switches for personal computer
customers
Also provides Bluetooth solutions for PCs; GPS system solutions for
signal acquisition, tracking, data extraction, and GPS navigation
Stock PerformanceIndustry Comparables
• WLAN
•ETHERNET
•BLUETOOTH
•HYBRID
•GPS
•PLC
•PON
•Stock Price: $34.50
•52 Week High: $44.88
•52 Week Low: $22.77
•Stock Beta: 1.82
•FY 2010 EPS: $0.73