Synaptics (SYNA) has agreed to acquire DSP Group (DSPG) for an all-cash transaction of $22 per share. The deal is expected to close by the end of 2021.
While DSP Group provides voice and wireless chipset solutions for converged communications, Synaptics engages in the development, marketing and sale of human interface semiconductor solutions for electronic devices and products.
Synaptics expects the deal to be immediately accretive to its adjusted earnings and generate annual run rate synergies of $30 million for the combined company within 12 months of closing.
The transaction is likely to be financed with a combination of existing cash balance and a fully committed, incremental debt financing arrangement. (See Synaptics stock charts on TipRanks)
The combination is expected to benefit Synaptics’ existing customer base as DSP Group has a strong hold across multiple markets in the Internet of Audio Things (IoAT), along with significant growth opportunities in low power SmartVoice, unified communications & collaboration and wireless IoT devices.
The President and CEO of Synaptics, Michael Hurlston, said, “DSP Group’s expertise in SmartVoice and ULE wireless solutions, coupled with Synaptics’ leadership position in far-field speech recognition and IoT directed Wi-Fi/BT combos enables us to deliver increasingly differentiated solutions to our combined customer base, while positioning us to lead the transition to AI enabled devices at the edge of the network.”
Following the announcement, Rosenblatt Securities analyst Kevin Cassidy reiterated a Buy rating on the stock and raised the price target to $200 from $175. The new price target implies 6.3% upside potential from current levels.
Cassidy noted, “We see Synaptics’ announced acquisition of DSP Group (DSPG, N/C) as adding important technology building blocks to its IoT product portfolio. Synaptics management team has proven to be very good managers of acquired companies and technologies.”
The stock has a Strong Buy consensus rating based on 7 Buys and 2 Holds. The average Synaptics price target of $188.89 implies 0.4% upside potential from current levels.
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Synaptics with 13.5% of investors increasing their exposure to SYNA stock over the past 30 days.
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