Silicon Labs to Acquire Sigma Designs, Get Z-Wave IP

Silicon Labs has announced that it had reached a definitive agreement to acquire Sigma Designs in a cash transaction valued at $282 million. By taking over Sigma Designs, Silicon Labs will be acquiring the former's Z-Wave-related IP and product portfolio, allowing Silicon Labs to solidify its range of wireles communication solutions for smart homes. The additional leverage will also allow Silicon Labs to more greatly influence the development of the Z-Wave standard going forward. Meanwhile, in an interesting twist in the acquisition agreement, the deal also includes a stipulation that if certain closing conditions are not met, Silicon Labs may acquire only the Z-Wave segment of Sigma for $240 million.

Silicon Labs will pay Sigma’s shareholders $7.05 per share in cash, which is a 26% premium over Sigma's closing price of $5.60 per share on December 6. In total, Silicon Labs will pay $282 million for Sigma’s STB, Smart TV, Media Connectivity, and IoT/Z-Wave businesses. Silicon Labs admits that the Smart TV and Media Connectivity businesses are not strategically aligned with its future plans, so it is not really interested in getting them. Sigma Design intends to divest or wind down its Smart TV business and is also talking to a potential buyer regarding its media connectivity unit. Meanwhile, if certain closing conditions are not met, Silicon Labs may acquire just the Z-Wave business unit for $240 million, if Sigma shareholders agree.