It has been announced that Tessera Technologies, Inc. (NASDAQ:TSRA) has entered into an agreement with DTS Inc. (NASDAQ:DTSI), where Tessera will be purchasing DTS at an approximate value of $850 million.
In this agreement, it was signed that Tessera will acquire DTS for a value of $42.50, per share. When put in comparison to that of DTS’s 30-day volume weighted average price, it can be seen that the purchase price is a 28 percent premium for DTS.
The Benefits That This Acquisition Can Hold For Tessera
It has already been announced that Tessera has an expectation that through this transaction, earnings per share, and free cash flow will immediately increase. The company has also predicted that $15 million will be directed to cost synergies within the first 12-18 months following the finalization of this transaction.
Through this merger, there will be a total employment of 450 engineers. In addition to this, through a proforma 2016 forecast, the company expects a revenue of approximately $450 million. They have stated that half of this revenue will come from licensing. Furthermore, it has been forecasted that $100 million of this is Pro-forma investments and cash on hand.
What This Merger Will Lead To For Tessera
Tessera CEO, Tom Lacey, stated that acquring DTS was a critical step that Tessera needed. Lacey, further explained that through merging with DTS, Tessera will be able to not only execute the strategic visions that is in place, but also promote product development, and potential market opportunity
It was further stated that Tessera believes that the company would be able to manipulate DTS capabilities so as to develop a next-generation level of audio, imaging, and semiconductor packaging technologies. Through this Tessera will be able to develop and strengthen its position with regards to the end markets.