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Chip firm backs takeover deal

Technology290420141818226-1The maker of audio chips for Samsung’s Galaxy smartphone is to be bought by an American rival in a deal worth £291 million.

Wolfson Microelectronics, which was spun out from the University of Edinburgh in 1984 and floated on the London Stock Exchange in 2003, recommended its shareholders accept a 235p-per-share offer from Cirrus Logic, based in Texas. The deal is expected to be completed in the second half of this year.

Shares in Wolfson jumped by more than 50% following the announcement.

Edinburgh-based Wolfson employs 420 staff, while Cirrus has 760 employees. Cirrus warned the merger could result in the loss of between 7% to 10% of the combined workforce in the 12 months from the acquisition.

The US firm expects the estimated 100 job losses will come in sales and corporate functions, rather than the enlarged group’s factories around the world.

Both firms make audio and other components that go into a host of consumer electronic devices such as smartphones, tablet computers, MP3 players and televisions.

Cirrus was founded in 1984 and last year posted sales of £425 million.

Cirrus chief executive Jason Rhode said the move strengthens his firm’s core business and adds new product categories such as specialist microphones.

Wolfson chairman Michael Ruettgers added: “We believe this will create a powerful platform for future growth, above and beyond our standalone potential.”

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Wolfson also reported first quarter results in the three months to 30 March which showed a £2.8 million pre tax loss due to slowing sales of 3G smartphones, leading to unsold inventory.

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