SiRF's Buyout, Quasi-False Premium (SIRF)

SiRF Technology Holdings Inc. (NASDAQ: SIRF) is soaring following a takeover.   This is a huge premium deal on the surface, but there might be issues after you start peeling the onion.

A company called CSR, a British chip maker, is buying SiRF Technology in an all-stock merger.    SiRF shareholders will receive 0.741 CSR shares. The deal values SiRF at roughly $136 million, or about 91 million pounds.

Here is where this gets interesting.  This is a 91% premium to SiRF’s closing price yesterday.  But the transaction leaves no room for the stock to rise.  It also is at a premium that is so far under what this company was believed to have been able to have received when GPS was hot.  SiRF was a $20+ stock back in the peak.

CSR also posted a loss and said that demand will remain weak in 2009.  But its shares are up 10% overseas.  Essentially, this ties bluetooth chips and GPS chips.

It makes sense for the acquirer.  It might not make as much sense to those SiRF holders who have been crushed.  The problem is that SiRF is under very tight control from management and holders do not have the same power as they might have elsewhere.

Jon C. Ogg
February 10, 2009