Intersil Acquires Xicor to Bolster Pure-Play Analog Strategy

Mar 17, 2004 11:53 AM
By Ashok Bindra, Editorial Director, PETech

To further expand its product portfolio in the growing analog market and strengthen its pure-play analog position, Intersil Corp. (Milpitas, Calif.) has inked a definitive agreement to acquire Xicor Inc., a manufacturer of high-performance programmable analog and mixed-signal ICs. This is a second analog acquisition for Intersil. In May 2002, the company acquired Elantec Semiconductor for $1.4 billion. Meanwhile, the maker has been divesting its wireless networking business. Intersil’s wireless group was sold to GlobespanVirata in August 2003.

With this acquisition, each Xicor shareholder will receive the value of $8 per share in cash and 0.335 a share of Intersil common stock (equivalent to $15.58 per share of Xicor stock, based on the closing price of Intersil stock on March 12, 2004). Each Xicor shareholder may elect to receive all cash, stock, or a combination of cash and stock, subject to proration based on the total cash and shares available in the merger. This reflects an aggregate purchase price of approximately $529 million.

Xicor, a key player in digital potentiometers and system management products, has also been expanding its line of amplifiers, real-time clocks, voltage references, power sequencing and data converters. In fact, to streamline its analog signal conditioning capabilities, Xicor recently purchased engineering design house Analog Integration Partners.

Both companies reported strong revenue growth in 2003. With a combined investment of 19% of sales in R&D, Intersil believes that it’s well positioned to continue on its growth path. In addition, Intersil expects to improve its cost structure through the consolidation of the two companies. With these cost savings and excluding the impact of amortization expenses, Intersil expects the acquisition to have no impact to its 2004 earnings per share and to be accretive to its 2005 earnings per share.

“Xicor is a recognized leader in standard products for the high performance analog market,” said Rich Beyer, Intersil’s president and CEO. “Following the acquisition of Elantec and our divestiture of the wireless networking business, the acquisition of Xicor further solidifies our position as a pure-play high-performance analog company. The addition of Xicor’s exceptional management team, its deep analog expertise and its outstanding standard analog product portfolio will greatly strengthen and diversify Intersil’s position in the high margin, general purpose standard analog market. Furthermore, we believe that combining these businesses will allow Intersil to more rapidly achieve its long term profitability model.”

“We are very pleased to join Intersil’s team,” said Lou DiNardo, co-chairman, president and CEO of Xicor. “This business combination will result in a very powerful value proposition to customers, investors and employees.” Upon the close of the transaction, DiNardo will serve as Intersil’s executive vice president of Standard Linear Products.

The boards of directors of both companies have unanimously approved the definitive agreement. The transaction is subject to customary regulatory approvals and a Xicor shareholder vote, and is expected to close by the end of the second quarter of calendar 2004.

For more information, visit www.intersil.com.

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