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Bluetooth firm CSR to buy GPS chipmaker SiRF

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CIOL Bureau
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LONDON, UK: British bluetooth firm CSR  Plc said on Tuesday it had agreed to buy U.S. chip firm SiRF in a $136-million, all-share deal to bolster it in a slowing technology market.

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CSR, which makes chips and devices using wireless-link bluetooth, said the deal would lead to a stronger combined balance sheet, better customer relationships and technology leadership.

On Tuesday CSR reported fourth quarter revenue at the bottom of the range forecast by the company and said it expected demand to remain weak during 2009.

However, CSR Chief Executive Joep van Beurden said the combined group would have the necessary product range once global markets recovered.

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"GPS (in cellphones) is expected to grow very rapidly over the coming years," he told reporters in a conference call.

"Our customers are asking for combinations of bluetooth and GPS."

Shares in CSR reversed early losses, following Q4 sales at the bottom of forecasts, and were 10.5 percent higher at 206 pence at 0946 GMT as analysts said the deal made sense.

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"It's a good strategic move from them, they are integrating a lot of radio technologies," said Ben Wood, research director at CCS Insight.

Lee Simpson, analyst at Jefferies International, said although the deal was not without risk, it could deliver cost, product and strategic synergies.

"CSR was difficult to like as a bluetooth-only play, while SiRF was doubly unlikeable as a GPS play," he said. "It makes good sense -- radio chips are combining bluetooth, GPS and Wi-Fi, and CSR needs to own that space."

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Shareholders in SiRF, a San Francisco-based GPS chip provider, would receive 0.741 CSR shares for each of their shares, valuing SiRF at about $136 million, CSR said.

Van Beurden said he foresaw no competition hurdles to the deal because the companies were strong in different segments.

SiRF Technology specializes in making chips for location-aware gadgets made by companies such as Garmin and TomTom for devices used by drivers, hikers and boaters.

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The pioneer of GPS technology, the firm faces increasing competition from larger rivals like Texas Instruments, Broadcom and Infineon.

Van Beurden said the companies could shave $35 million - or 10 percent -- from their combined cost base following the merger, which is expected to close late in the second quarter.

CSR reported fourth quarter revenue of $140.1 million.

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And the company reported a diluted loss per share of $0.05, against earnings of $0.26 for the same period a year ago, after it said global markets continued to worsen.

SiRF also reported disappointing fourth-quarter numbers on Tuesday, with revenue of $47.3 million down 53 percent year-on-year and below Reuters Estimate forecast of $50.8 million.

CSR said it saw no short-term alleviation in pressure on consumer spending, and forecast first quarter revenue in the range $65 million to $85 million, about 50 percent down on the same period a year ago.

"The market continues to be very difficult," Chief Financial Officer Will Gardiner said in the conference call. "But we are bullish about regaining market share in the second half of the year."

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