iWatt to be Acquired by Dialog Semiconductor for $310+ Million

July 01, 2013 by Jeff Shepard

Dialog Semiconductor Plc has entered into an agreement to acquire iWatt Inc. for a cash payment of approximately $310 million, with additional contingent consideration of up to $35 million. The contingent consideration is based on achieving future revenue targets. The acquisition is being funded from both Dialog’s existing cash resources and additional debt facilities of $125 million. The transaction on an underlying basis is expected to be accretive in the first quarter after closing and on an IFRS basis by the end of 2014. The boards of directors of both companies have approved the acquisition, with the transaction expected to by the end of July 2013.

In financial year 2012, iWatt generated revenue of $74 million (growth of 46% over 2011), with an associated gross margin of 49% (compared to 45% in 2011). Revenue growth for the acquired business in the order of approximately 20% per year - in line with anticipated market growth projections - is expected to be achieved in the medium term. Additional financial details and guidance will be provided in Dialog’s second quarter earnings call planned for July 23, 2013.

Dialog’s CEO Jalal Bagherli commented, "This acquisition underscores Dialog's strategy to diversify our markets and growth opportunities through select strategic acquisitions. We see the acquisition as highly complementary to our existing PMIC business enabling Dialog to address adjacent emerging power management segments, including cutting-edge ac-dc solutions for next generation fast portable chargers as well as ICs for LED solid state lighting.”

“iWatt has been shipping products to numerous top-tier customers and is expected to increase our future business opportunities with market leading customers such as Samsung, HTC and Nokia in the portable segment, and GE, Osram and Philips in the fast growing solid state lighting market." concluded Bagherli.

Ron Edgerton, iWatt’s CEO and President and Chairman, commented, “The iWatt team is excited to join forces with Dialog. Our digital power management technology has allowed iWatt to become a leader in both ac-dc power conversion and the emerging high growth LED solid state lighting market.

The combined company will be in a stronger position to provide the complete end-to-end solution for next-generation rapid and intelligent charging for portable devices.” added Edgerton.

Headquartered in Silicon Valley, California, with approximately 180 employees worldwide, iWatt is a leading provider of digital power management integrated circuits. iWatt has a strong design and application engineering presence in Asia. Its innovative PrimAccurate™ technology platform enables high performance, energy-efficient, small form-factor and cost-effective solutions for markets such as ac-dc power conversion and LED Solid State Lighting (SSL). The company’s solutions are designed into the products of leading global OEMs and it has shipped more than one billion power management ICs since 2007.

RBC Capital Markets LLC acted as financial advisor and Davis Polk & Wardwell LLP in the US and RPC in the UK acted as legal advisors to Dialog.