Tessera Technologies to buy DTS in $850m deal

Tessera Technologies has agreed to buy audio solutions provider DTS for $42.50 a share in a deal valued at around $850m.

The price represents a 28% premium to DTS’s 30-day volume weighted average price as of 19 September and the deal is expected to be immediately accretive to Tessera’s earnings per share and free cash flow.

California-based Tessera, which develops imaging and semiconductor packaging and bonding technologies, said the combined company is expected to achieve pro-forma 2016 revenue of approximately $450m, nearly half of which will come from product licensing.

The combined company is expected to realise $15m in annualised cost synergies within the first 12-18 months following the closing of the deal, which Tessera plans to fund with a combination of available cash on hand and approximately $600m of committed debt financing from RBC Capital Markets.

Tessera’s chief executive officer, Tom Lacey, said: “Our acquisition of DTS's talented team and industry-leading products will represent a transformational step in the execution of Tessera's strategic vision, with exciting new product development and marketing opportunities.

“Our complementary technology portfolios are ideally suited to deliver the next generation of audio and imaging solutions to mobile, consumer electronics, and automotive markets while expanding our ability to address incredible new opportunities in IoT and AR/VR.”