Lattice Semiconductor To Acquire Silicon Image For Approximately $600 Million

Lattice Semiconductor Corporation (NASDAQ: LSCC), a leading provider of programmable connectivity solutions, and Silicon Image, Inc. (NASDAQ: SIMG), a leading provider of wired and wireless connectivity solutions, today announced that they have signed a definitive agreement, pursuant to which Lattice will acquire Silicon Image in an all-cash tender offer of $7.30 per share, representing an equity value of approximately $600 million (or approximately $450 million on an enterprise value basis) and a 34.6% premium to the average closing price over the last 90 trading days and a 23.7% premium to the closing price on January 26th.

Key Benefits of the Transaction

  • Increased Strategic Relevance for Customers
    • Allows combined entity to drive early collaboration during product design and ultimately deliver optimized ASSP solutions, resulting in deeper, more meaningful relationships with customers
  • Revenue Expansion Opportunities
    • Increased market presence and combined product offering will result in greater lifetime revenue opportunities
  • Strong Combined IP Portfolio
    • Proprietary low-power, small form factor and low-cost FPGA technology enables programmable connectivity in a broad range of markets
    • Leading provider of IP with proven implementations for worldwide standards
  • Creates Economies of Scale With Meaningful Synergies
    • Expected to be immediately accretive on a non-GAAP basis through efficiencies in operating expenses and supply chain
    • At least $32 million in annual synergies which are expected to be realized within one year after the closing of the transaction

Darin G. Billerbeck, Lattice Semiconductor’s President and Chief Executive Officer, said, “This is a truly transformative event for both Lattice Semiconductor and Silicon Image. For the first time in the semiconductor industry, a single company will combine the design flexibility and time to market benefits of FPGAs, with the highly integrated, function and cost optimization benefits of ASSP solutions. We are excited to move forward with Silicon Image and confident we will be able to drive higher revenue and earnings growth, through the benefits of better economies of scale and material cost synergies. We expect this transaction to be immediately accretive on a non-GAAP basis.”

Camillo Martino, Chief Executive Officer of Silicon Image, commented, “We are excited to move forward with this unique business combination. Lattice’s management team has a strong track record of execution and operational excellence, both critical to the continued expansion of our product portfolio and ability to support our customer’s evolving requirements. Importantly, Lattice shares our commitment to building upon Silicon Image’s rich history of standards creation and the development of new wired and wireless connectivity innovations. This transaction is the culmination of a strategic process conducted under the direction of our board of directors, and represents a significant creation of value for our shareholders.”

Mr. Billerbeck concluded, “Lattice created the market for programmable connectivity solutions in the consumer market, capitalizing on our strong foothold in the communications and industrial markets. Silicon Image has successfully established numerous global technology standards, and built a highly valued intellectual property portfolio in wired connectivity, millimeter wave wireless technology and software services solutions. Our respective technical capabilities, product portfolios and visions for the future are complementary and will be even more powerful when combined. Lattice is fully committed to building upon the foundation established by Silicon Image in helping establish industry standards, investing in new technologies and driving them to market, which in turn should provide us with greater access to our customers’ roadmaps and unique insight into their product development.”

Additional Transaction Details

The transaction has been unanimously approved by the boards of directors of both companies and is expected to close by the end of March 2015. Pursuant to the definitive agreement, a subsidiary of Lattice Semiconductor will commence a tender offer for 100% of the outstanding shares of Silicon Image common stock for $7.30 per share in cash. The tender offer is required to be commenced within 10 business days and to remain open for at least 20 business days after launch. Following successful completion of the tender offer, any shares not acquired in the tender offer will be acquired in a second-step merger at the same per share cash price. The directors and executive officers of Silicon Image have agreed to tender their shares in the tender offer. Closing of the tender offer is subject to customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and there being validly tendered and not withdrawn a number of shares of Silicon Image common stock equal to at least a majority of the total outstanding shares of Silicon Image common stock. The transaction will be funded through a combination of cash on hand and new debt financing. The Company has received a financing commitment of $350 million from Jefferies Finance LLC. The proposed transaction is not subject to a financing condition.

Jefferies LLC is serving as the financial adviser to Lattice Semiconductor and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal adviser. Barclays PLC is serving as the financial adviser to Silicon Image and Fenwick & West LLP is serving as legal adviser.