Tsinghua Holdings Offers $1.39 Billion for Spreadtrum

Andrew Klips |

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.

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