01 Jun Canadian firm acquires Silicon Logic
Eau Claire, Wis. – Tundra Semiconductor Corp., the Ottawa, Ontario-based developer of system interconnect for the communications and computing markets, has announced the acquisition of Silicon Logic Engineering (SLE), a high-end chip design company based in Eau Claire, for $14 million.
SLE will continue to be based in Eau Claire as a division of Tundra Semiconductor Corp. The company develops high-performance communications and computer chip for large networking and computing customers.
Jim Roche, president and CEO of Tundra, said SLE was an attractive acquisition target because its intellectual property will strengthen Tundra’s position in system interconnect, the piece of network architecture compared to the central nervous system in humans.
By combining SLE’s technical and engineering depth with Tundra’s existing IP and customer relationships, he expects Tundra to expand its product portfolio and broaden the range of applications it can address. Tundra expects the acquisition to generate revenues through design services and IP licensing.
“Everything they have done has worked the first time, and in the semi-conductor industry, that’s quite rare,” Roche said of SLE.
Roche also cited SLE’s financial performance, both in terms of revenue growth ($2 million to $2.3 million per quarter) and profitability. With gross margins of between 35 percent and 40 percent, and profit after tax of between 10 percent and 12 percent of revenues, the companies are on a similar financial track, he said.
Tundra’s other recent acquisitions, of Potentia Semiconductor and Alliance SSBU, also were made with an increasingly profitable revenue stream in mind.
Another factor in the SLE purchase was a compatible (open and fun) culture, Roche indicated. Founded in 1996, SLE is a private company with more than 40 employees that have an average of over 15 years of design experience.
The only change planned for the SLE workforce, Roche said, is growth.
“They are designing the world’s fastest chips,” he marveled, comparing the acquisition to Mercedes Benz buying Ferrari.
Jeff West, president of SLE, said the combined companies would be uniquely positioned to respond to a growing system interconnect outsourcing trend, but added the strong alignment of the companies’ cultures will generate a natural synergy. West is now vice president of design services at Tundra.
Under the terms of the agreement, the purchase price of $14 million is comprised of $10 million in cash and $4 million in (approximately) 259,000 common shares of Tundra. Half of the share consideration will be payable over the next two years, depending on operational objectives.
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