Dialog Semiconductor to acquire Adesto Technologies to further expand the industrial IoT market

02/25/2020

Recently, Dialog Semiconductor, a supplier of highly integrated power management, charging, AC / DC power conversion, Wi-Fi and Bluetooth low energy technology, has joined forces with the leading IIoT market to innovate custom integrated circuits (ICs) and embedded systems. Supplier Adesto Technologies Corporation ("Adesto") today announced that the two parties have signed a definitive agreement and Dialog will acquire all outstanding shares of Adesto.

The acquisition of Adesto will accelerate Dialog's expansion into the growing IIoT market, enable smart buildings and industrial automation (Industry 4.0), and seamlessly drive cloud connectivity. Adesto is headquartered in Santa Clara, California, and has approximately 270 employees. Its mature intelligent building automation industrial solution portfolio complements Dialog's manufacturing automation portfolio very well. Adesto's solutions are sold in the industrial, consumer, medical and communications markets.

Dr. Jalal Bagherli, CEO of Dialog Semiconductor, said: "This acquisition will sustainably enhance our position in the industrial IoT market. Adesto's connectivity solutions and highly optimized products for building and industrial automation have strong capabilities that complement each other perfectly. And we have expanded our Industrial IoT product portfolio that we have acquired following our recent acquisition of Creative Chips. Adesto ’s deep customer relationships, comprehensive system technology expertise and know-how will bring greater value to Dialog ’s customers. "

Narbeh Derhacobian, CEO of Adesto, said: "By combining Dialog and Adesto's industry-best technologies, we will create unique IIoT solutions for today's increasingly connected world. We are very excited to join Dialog, which will provide our joint The customer base brings more value. "

Advantages of the acquisition

Combining Dialog and Adesto brings complementary product portfolios to a broad customer base serving growing applications in the industrial market, enabling cross-selling.

Combination of two companies:

l Will expand Dialog's strength in the field of IIoT. By combining industrial connectivity solutions, smart meters and building automation solutions, it has acquired more than 5,000 customer companies, most of which are new customers to Dialog.

Dialog's wireless product portfolio (BLE, Wi-Fi) will complement Adesto's industrial wired connectivity product portfolio and better serve smart buildings and industrial applications. Cloud connectivity further brings differentiated advantages to Dialog's existing industrial solutions.

By combining Adesto's low-power dedicated storage products with Dialog's BLE and Wi-Fi wireless connection technology and True Wireless Stereo (TWS) audio ICs, a complete set of wearables, smart earphones, and other IoT applications is achieved System solutions.

l Unlocking future growth in the automotive market by leveraging Dialog's mature automotive-grade production and testing processes to empower Adesto's dedicated storage products. In addition, these products are targeted at the emerging, fast-growing field of artificial intelligence (AI).

l Increased Dialog's engineering capabilities and design scale, and further expanded Dialog's existing custom IC business, making Dialog one of the largest custom analog mixed-signal semiconductor suppliers.

    Transaction structure and terms

Dialog will acquire all of Adesto's outstanding shares in cash for $ 12.55 per share, or approximately $ 500 million in corporate value. Funding for the acquisition will come from Dialog's balance sheet performance.

After the acquisition is completed, it is expected that Dialog will increase its earnings per share (EPS) in the first calendar year. And in the first calendar year after the acquisition, Dialog expects to achieve an annual cost synergy of approximately $ 20 million in the combined company. Based on the complementary nature of the two companies' product portfolios and technologies, Dialog expects significant additional revenue synergies. Adesto expects revenue of approximately $ 118 million in fiscal 2019 and expects to continue to grow revenue in the coming years.

Depending on regulatory approvals and customary closing conditions, the acquisition is expected to be completed in the third quarter of 2020.

The Adesto board of directors has unanimously approved the transaction and recommended that Adesto shareholders vote in favour of the transaction, and that both Adesto directors and executive management have agreed to vote in favour of the transaction.

In this acquisition, Hogan Lovells served as Dialog's legal advisor and BMO Capital Markets served as financial advisor. Fenwick & West LLP acted as legal counsel to Adesto and Cowen & Company, LLC as financial advisor.