MaxLinear Gains Entropic’s Connected Home Portfolio in Buyout Deal

MaxLinear (NYSE: [[ticker:MXL]]), a Carlsbad, CA-maker of radio frequency and mixed-signal semiconductors, has agreed to acquire San Diego-based Entropic Communications (NASDAQ: [[ticker:ENTR]]) in a cash-and-stock deal valued at nearly $287 million.

The acquisition enables MaxLinear to broaden its access to broadband technology for the “connected home” and related markets by adding Entropic’s proprietary technology portfolio to its own expertise in telecommunications and wireless network infrastructure.

Entropic has more than 1,500 patents (issued and pending) covering semiconductor technologies broadly deployed across major cable, satellite, and fiber optic service providers. The company helped pioneer the Multimedia over Coax Alliance (MoCA) technical standard for home networks, invented key Direct Broadcast Satellite technology, and developed certain set-top box technology.

In a statement released after official trading ended Tuesday, MaxLinear said its cash-and-stock offer ($1.20 in cash and .22 share of MaxLinear’s common stock for each common share of Entropic) amounted to $181 million in “implied enterprise value,” a valuation that includes debt and excludes cash. Entropic has no debt, and had $105.8 million of available cash as of Dec. 31, which brings the total value of the transaction to almost $287 million.

MaxLinear says the acquisition is expected to be immediately accretive to its non-GAAP earnings. The company says it could realize more than $20 million in cost savings in the first year after the deal closes.

The boards of both MaxLinear and Entropic unanimously approved the buyout. If shareholders of both companies approve the deal, MaxLinear shareholders would own about 65 percent of the combined company, and Entropic shareholders would hold about 35 percent.

The deal also has to clear customary regulatory reviews, and is expected to close by the end of June.

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.