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Tsinghua Holdings Offers $1.39 Billion for Spreadtrum

By  +Follow June 21, 2013 3:36PM
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Tsinghua SchoolSpreadtrum Communications (SPRD), a China-based fabless semiconductor provider, said Friday morning that it has received a preliminary acquisition offer valued at $28.50 in cash per American Depositary Share from Tsinghua Unigroup Ltd., sending shares to a new one-year high. The offer represents a transaction value of about $1.39 billion, a 20 percent premium to Wednesday's closing price, the day before the offer was submitted. The proposed price is a 44 percent premium to Spreadtrum's 30-day volume-weighted trading price.

Tsinghua Unigroup is an operating subsidiary of Tsinghua Holdings Co. Ltd., a state-owned company funded by China's Tsinghua University. Tsinghua Holdings has agreed to provide equity funding up to $1.5 billion for the transaction if debt financing isn't available.

Spreadtrum said that its board is reviewing and evaluating the proposal and has not yet made any decisions or provided a response with respect to the proposal to Tsinghua.

In May, Spreadtrum reported first-quarter revenue of $189.0 million, up 17.3 percent from the year prior quarter. Adjusted profits for the quarter, which exclude stock-based compensation costs, totaled $26.5 million, or 50 cents per ADS, down from $29.3 million, or 57 cents per ADS, in the first quarter of 2012.

Earlier this month, the company surprised by upping its guidance for the current quarter, saying that it expects revenues between $270 million and $278 million, an increase of 42.9 percent to 47.1 percent over the first quarter. Previously, Spreadtrum had guided revenue in the range of $220 million to $228 million.

"We are increasing our revenue guidance due to the continuing strong demand throughout the quarter for low-cost smartphones," said Dr. Leo Li, chairman and chief executive of Spreadtrum, in a statement of the improved outlook.

Since hitting 2013-lows of $14.91 in February, shares of SPRD have climbed about 75 percent, including a 16-percent spike with the possible buyout news on Friday.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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By  +Follow June 21, 2013 3:36PM
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