CSR plc (LSE: CSR) cut the value it will pay for Zoran Corp. (Nasdaq: ZRAN) by 29% to $484 million from the $679 million originally announced in February. In a statement to the London Stock Exchange on Thursday, CSR cited several developments that affected Zoran's near-term outlook. Excluding Zoran's $251 million in cash, the company's transaction value is $233 million.
Under the revised terms for the merger, Zoran shareholders will receive $6.26 in cash and 0.589 ordinary shares of CSR for each share of Zoran. This amounts to $9.19 per share for Zoran, based on CSR's closing price on Thursday of ₤3.08, compared with the original price of $13.03 per share for Zoran. CSR added that the $313 million payment will be financed from its own resources, and that it was cancelling the share buyback that was part of the original deal.
The companies also revised the cash and share components of the deal, with the share component rising to 68% from the original 35%. When the deal is closed, Zoran shareholders will own 16.5% of CSR.
If Zoran receives a better offer, and cancels the acquisition by CSR, it will pay a fine of $12.7 million.
Zoran, founded by Dr. Levi Gerzberg, develops processors for digital consumer electronics and imaging products, such as digital printers, digital cameras and DVDs. CSR manufactures wireless connectivity solutions.
The revised transaction reduces uncertainty about Zoran, as it indicates that iot and CSR intend to go through with the deal. Zoran's share price rose 15.1% on Nasdaq on Friday to $8.29, giving a market cap of $414 million; the revised transaction value reflects a 17% premium. CSR's share price rose 1.6% to ₤3.13, giving a market cap of ₤559 million.
CSR and Zoran also said that they were confirming previous revenue guidance for the second quarter, announced in conjunction with their financial reports for the first quarter last month.
CSR said, "Since the transaction was originally announced on 21 February 2011, several developments have impacted the near-term outlook of Zoran, including the earthquake and tsunami in Japan and the recent announcement by Cisco Systems Inc. (Nasdaq: CSCO) that it will exit its Flip digital video camera product line. These and other events negatively impacted Zoran's expectations for its second quarter financial results, as discussed in Zoran's 9 May 2011 announcement."
Investors worries about Zoran's future began with the publication of its financial report for the first quarter. The company's GAAP-based net loss widened to $30.4 million and non-GAAP net loss widened to $21.3 million, and revenue fell 14.4% from the corresponding quarter to $84.9 million revenue.
It now remains to be seen whether Zoran shareholder Starboard Value LP (formerly Ramius Value and Opportunity), which owns 9.1% of the company, will agree to the revised terms. Ramius forced the ouster of some Zoran directors after a protracted fight, and opposes the merger with CSR.
Published by Globes [online], Israel business news - www.globes-online.com - on June 19, 2011
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