Tessera Technologies, which licenses technology mainly to the semiconductor industry, said it would buy DTS, a provider of audio technology for mobile devices, home theater systems and cars, for about $850 million in cash.
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According to a statement, the combined company will have “over 450 engineers focused on developing next-generation imaging, audio and semiconductor packaging technologies”, and “is forecasted to achieve pro forma 2016 revenue of approximately $450 million, almost half of which will come from product licensing”. This represented a 28 percent premium based on 30-day volume weighted average price of September 19. DTS was advised by Centerview and DLA Piper LLP in the deal; Tessera was advised by GCA and Skadden, Arps, Slate, Meagher & Flom LLP.
DTS’s audio solutions include DTS-HD and DTS:X audio codecs, DTS Headphone:X and DTS Sound pre-and post-processing solutions, DTS Play-Fi wireless audio, and HD Radio. “We believe that as part of Tessera we will be in a unique position to deliver the world’s leading audio and imaging solutions to all of our key markets and drive meaningful value for our combined customers, partners and employees”. It will be led by Tessera Chief Executive Tom Lacey, while DTS CEO Jon Kirchner is expected to join as president.
The combined company will have a new corporate name and stock symbol after the deal closes. Tessera expects 2016 revenue of about $450 million as a result of the transaction, compared with $273.3 million in 2015.
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Closing of the transaction is expected by late in the fourth quarter of 2016 or early in the first quarter of 2017, subject to regulatory approval as well as the approval of DTS’ stockholders and other customary closing conditions.
