ANADIGICS to be acquired by GaAs Labs
$0.35 per share price is 38% above 30-day average closing price
After years struggling to achieve a sustainable business model — most recently pivoting from mobile to infrastructure and planning yet another pivot to VCSELs — ANADIGICS is ending its 30 year life as an independent company. Today ANADIGICS announced an agreement to merge with GaAs Labs, the latest semiconductor acquisition by John Ocampo's venture firm.
GaAs Labs will pay $0.35 per share or approximately $32 million in cash, slightly more than ANADIGICS' trailing-twelve-month revenue of $30.5 million. The price per share is 38 percent above the average closing price of ANADIGICS stock during the 30 days ending November 11.
The transaction is expected to close in December 2015 or January 2016. The merger agreement allows ANADIGICS to seek better offers for 25 days, ending December 6, and provides GaAs Labs with the option to match any "better" offer considered by the ANADIGICS board. GaAs Labs will receive a break-up fee if the deal is not consummated.
With the announcement, ANADIGICS also released their third quarter financial results. Revenue was $12.1 million, down 23 percent from the prior quarter, with a GAAP net loss of $6.2 million. The company's net cash was $7.9 million, down from $11.2 million at the end of the second quarter.
Running out of cash, ANADIGICS had to do something to survive, which provided the opportunity for GaAs Labs. ANADIGICS joins the stable with MACOM, acquired by GaAs Labs in 2009, and Nitronex, acquired in 2014. Ocampo's first task will be to stabilize ANADIGICS, revisiting the strategy and rationalizing markets and products. Although ANADIGICS will operate as a wholly-owned subsidiary of GaAs Labs, I suspect that the company, once restructured, will merge with MACOM (i.e., be purchased by) as Nitronex did.
ANADIGICS is generally a good strategic fit with MACOM. It will significantly strengthen MACOM's CATV share and add a large family of small cell power amplifiers, complementing MACOM's GaN strategy for base station PAs. GaAs Labs will likely end ANADIGICS' involvement in the mobile market and will have to assess whether staying in the infrastructure side of Wi-Fi makes sense.
What will Ocampo do with ANADIGICS' processes and 6-in fab in New Jersey? MACOM has promoted a "fab lite" strategy; an underutilized 6-in fab is not "fab lite." Arguably, a fab can't be loaded running wafers for traditional communications infrastructure and defense applications, which are MACOM's historic markets. However, the fab may provide needed capacity for MACOM's growing optical laser diode business, acquired with BinOptics.
ANADIGICS had already been moving in this direction, seeing market demand for VCSELs as a way to load the fab. In August, they secured the role as VCSEL manufacturing partner for POET Technologies. POET is commercializing a planar opto-electronic technology (POET) to monolithically integrate electronic and optical circuits. We'll have to see if the relationship with POET survives the GaAs Labs acquisition or if MACOM is too much of a competitor.
The maturing of GaAs MMICs in the mid 1980s spawned a string of GaAs start-ups. ANADIGICS, Hittite and TriQuint were perhaps the most successful — certainly having the longest tenure. ANADIGICS, the last one standing, now leaves the stage.