editorialview by Dr Richard Stevenson, Editor Hidden in the filings
I WAS SHOCKED when I heard of the plans for RFMD and TriQuint to merge. And as I mulled over the consequences, several questions popped into my head: Would this really be a merger of equals? What will this mean for the GaAs industry? And who proposed this – was it initiated by TriQuint, or by RFMD?
While we may never know the details of the courtship, I have found out more about it than I ever would have imagined from a source of information that is often very dull: SEC filings. While working my way through the S4 document filed by TriQuint on 14 April, I discovered that this relationship is far from the whirlwind romance that I thought it might have been. Instead, it was one of the biggest, best kept secrets within our community.
It may surprise you to hear that as far back as 2009, the CEOs of both firms were getting together over breakfasts lunches and dinners to discuss the possibility of merging to form a new venture. However, it took until 2013 before these conversations led to serious thinking by the boards about the pros and cons of such a move.
Further revelations from the S4 filing were that it wasn’t just RFMD that wanted to unite with TriQuint. There was also an unnamed company putting in several bids to buy the chipmaker, offering first $8.50, and then $10 and finally $10.10 per share.
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So it is clear that TriQuint has attributes that other firms find attractive. Its strengths include the filter business that provides a key component in the multi-band power amplifier modules, and a defence business that has a long, rich history and healthy margins.
What isn’t so strong is TriQuint’s GaAs PA business that is dragging down overall margins, but this division could be put right if it comes under the wing of RFMD.
Certainly, many investors are optimistic about the future of the RFMD-TriQuint venture, with the share price of both firms rising on the back of this news. And I’m sure that the colossus that results has the potential for great things, so long as it can get the people in the right positions, which is not easy when two established firms come together.
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June 2014
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