Semtech announced in June 2005 that it would buy Swiss chipmaker Xemics for $43 million in cash, with up to $16 million more tied to performance milestones. The acquisition closed on June 23, 2005. Semtech later reported paying about $43.3 million at closing and said the transaction could total about $59 million if all variable consideration were paid.
What Semtech agreed to pay
| Deal figure | What it means |
|---|---|
| $43 million | The cash consideration Semtech announced on June 20, 2005. |
| Up to $16 million | Additional contingent consideration tied to performance milestones during the 12-month period ending April 30, 2006. |
| Approximately $43.3 million | The amount Semtech’s 2007 annual report says it paid at closing on June 23, 2005. |
| Approximately $59.0 million | The potential total value reported in the 2007 filing if all variable purchase-price portions were paid. The filing separately said the earn-out was not expected to be payable. |
So the headline $43 million was the announced cash price, not a statement that every possible payment was included. The later $43.3 million figure is the reported closing payment; approximately $59 million was a conditional ceiling, not the confirmed amount paid.
Why Semtech wanted Xemics
Semtech made analog power-management and overvoltage-protection products. Xemics brought expertise in designing ultra-low-power semiconductor components. Semtech argued that combining those capabilities could help it integrate more functions into products for portable and communications customers, where compact, low-power designs mattered.
The strategic case also included access to automotive, home-security, industrial and medical markets. Those were management’s expectations at the time of the 2005 announcement, not evidence by themselves that the acquisition later delivered particular products or financial results. Semtech’s announcement quoted Xemics CEO Alain Dantec saying the buyer’s size and infrastructure should accelerate development of products based on Xemics technology.
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What Xemics brought to the deal
Xemics was a Swiss fabless semiconductor and research-and-development company founded in 1997 as a spinout of the Swiss Center for Electronics and Microtechnology. Its portfolio included:
- Sensor interfacing and data acquisition
- 8-bit RISC microcontrollers
- RF transceivers
- Audio codecs
The products were aimed at battery-powered wireless and sensing applications. Contemporaneous coverage described Xemics as having 77 employees and about $23 million in net sales in 2004, giving context for the scale of the business Semtech acquired.
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Expected accounting and earnings effects
Semtech forecast a one-time in-process research-and-development charge of $4 million to $5 million in the quarter ending July 31, 2005. At announcement, it expected the acquisition to be neutral to earnings initially and accretive within two quarters. Those were forecasts made in 2005, rather than a report of the deal’s eventual financial performance.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.When the acquisition closed
Semtech announced the planned acquisition on June 20, 2005, saying it expected the transaction to close within ten days. Its 2007 annual report records the closing on June 23, 2005, through Semtech International AG, Semtech’s wholly owned Swiss subsidiary.
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