* Tsinghua Unigroup offers $31 per ADS for Spreadtrum
* Sweetened offer values company at $1.78 billion
* Deal offers Spreadtrum access to Chinese carriers
By Sruthi Ramakrishnan
July 12 Chinese cellphone chip designer
Spreadtrum Communications Inc is set to be acquired by
a state-owned Chinese company in a $1.78 billion deal likely to
improve its links to mobile carriers in the world's most
In a sweetened offer, a unit of government-owned Tsinghua
Holdings Co Ltd offered to pay $31 per American Depositary Share
(ADS) for Spreadtrum. This was 9 percent above its previous bid
Shares in Spreadtrum rose 12.7 percent to $29.80 on the
Nasdaq, lagging the 17 percent premium to Thursday's closing
price offered by Tsinghua Unigroup Ltd.
Headquartered in Shanghai, Spreadtrum develops chips for
smartphones, feature phones and other consumer electronics
products. Its chips support 2G, 3G and 4G wireless
Needham & Co and Topeka Capital Markets reduced their
ratings on the company's stock to "hold" from "buy", and said
they believed rival bids were unlikely.
"As a China state-owned enterprise, Tsinghua can increase
Spreadtrum's relationships with carriers such as China Mobile
," Topeka analyst Suji De Silva wrote in a note.
Spreadtrum, which gets most of its sales from China and
South Korea, counts HTC Corp and Samsung Electronics
among its customers and had $720 million in revenue
Tsinghua will offer Spreadtrum expertise in consumer
products, protection and support of a vast IP portfolio, as well
as access to capital markets in China, Tsinghua Unigroup Chief
Executive Zhao Weiguo said in a statement.
Tsinghua Holdings is a Chinese government-owned corporation
funded by Tsinghua University, and controls companies such as
Chengzhi Shareholding Co Ltd and technology firm
Unisplendour Co Ltd.
Spreadtrum said its board recommended that shareholders
accept the offer. Shareholders will meet soon to consider the
deal, it said in the statement.
Spreadtrum, which has a market capitalization of $1.28
billion, said in June it had received a $1.38 billion, or $28.50
per ADS, takeover offer from Tsinghua.
Morgan Stanley Asia gave fairness opinion to Spreadtrum and
Fenwick & West LLP provided legal advice. Morrison and Foerster
LLP gave legal advice to Tsinghua.
Spreadtrum's shares have risen 18.6 percent since it
received the offer in June. They closed at $26.45 on the Nasdaq