Spreadtrum Communications Inc is a Chinese mobile chip maker headquartered in Shanghai, China. The company surged to a record in New York after it has agreed to a takeover offer. The deal was priced at US$1.78 billion which was the largest acquisition proposal of a semiconductor firm in about a year.
The offer was proposed by a Chinese state-owned company and backed by Tsinghua University, Tsinghua Unigroup Ltd. The offer was at US$31 per American Depositary Shares (ADR) which was 8.8% higher that its last month's offer for Pudong, another China based firm. The American depository receipts increased to its highest since it started trading in 2007. The said receipts rose by 13% to US$29.76.
The bid between Spreadtrum and Tsinghua is equal to 11.1 times earnings before interest, taxes, depreciation and amortization (EBITDA). The US$1.78 billion deal exceeded the median ratio of 10.4 of almost 90 deals in the past decade. This was shown in a data compiled by Bloomberg. The takeover of the company would allow the Chinese government to increase its 3G network offerings through the semiconductor technology of Spreadtrum. This was according to analyst Jay Srivatsa of Chardan Capital Markets.
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