Small cells

Intel Favorite to Buy Mindspeed's Small Cell Assets

Intel is seen as the most likely buyer for Mindspeed's small cell assets, according to industry sources.

Mindspeed Technologies Inc. (Nasdaq: MSPD) announced Tuesday evening that it is selling off most of its chip business to rival M/A-COM Technology Solutions Inc. for $272 million. A statement from the company said that it is in "advanced discussions" with a strategic acquirer for the wireless side of its business, which includes the small cell system-on-a-chip team it bought when it acquired Picochip in 2012 for $58.1 million. (See MACOM to Buy Mindspeed for $272M.)

Naturally, Light Reading wondered just who the buyer might be.

"You'd need a company in the communications business but not really in the wireless basestation space," suggests Linley Gwennap, analyst at The Linley Group . He suggests that the main players in the small cell chip space -- Broadcom Corp. (Nasdaq: BRCM), Qualcomm Inc. (Nasdaq: QCOM), and Cavium Inc. (Nasdaq: CAVM) -- are already well sorted for silicon.

In fact, industry sources lean towards the idea that Intel Corp. (Nasdaq: INTC), which is just getting into the LTE modem market, is the likely buyer. "They were investors... and want to get into C-RAN [cloud radio access network]," one source tells us. (See C-RAN Blazes a Trail to True 4G.)

"Intel isn't commenting on the rumor," a spokeswoman for the chip giant told us.

Samsung Corp. is seen as the next most likely candidate. The South Korean giant already makes its own small cells and was an early customer of Picochip. (See Sprint Has Samsung 4G LTE Small Cells: Analyst.)

"Intel and Samsung seem to be getting into new markets recently," analyst Gwennap notes.

He also suggests Marvell Technology Group Ltd. (Nasdaq: MRVL) as an outside possibility. "Although they don't seem to be in an acquisition mood lately," Gwennap adds.

It might not be too long until we know for sure which company is -- or isn't -- snapping up Mindspeed's wireless assets. Mindspeed says it expects its efforts to find a buyer for its wireless business to continue in the coming weeks.

— Dan Jones, Mobile Editor, Light Reading

chuckj 11/8/2013 | 7:18:46 AM
Re: Confusion about this deal Someone on yahoo message bd speculated that, the only stake holder at mindspeed that can break this deal are the conv bond holders. They have to cross over to Macom debt intact with new debt covenants or there is not enough financing to close this deal. This is distressed asset but at the same time it has to bring satisfactory dollars to payoff their demand to change their debt covenants and cross over.
DanJones 11/7/2013 | 1:47:38 PM
Re: Confusion about this deal I will try to find out for you.
Svonkie 11/7/2013 | 11:20:42 AM
Confusion about this deal You report that MindSpeed is selling "most of its chip business to M/A-COM Technology Solutions Inc. for $272 million."

When the wireless division is sold, where will the proceeds go, exactly? No one seems to know. To M/A-COM? To shareholders? To somebody else?

When looking at similar deals in the recent past (small cell SoC firms) - Broadcom's purchase of NetLogic, for example, the multiple may be as high as 8 times revenue.

In the most recent quarter, MindSpeed's wireless division brought in $4MM. We could be talking about more than $100MM in proceeds from a sale.

Some unanswered questions need to be answered.

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