UK’s CSR in £200m Samsung deal

BRITISH microchip firm CSR has sold its mobile phone technology division to South Korean electronics giant Samsung for $310m (£198.2m).

The Cambridge-based company said its Bluetooth, WiFi and GPS location technology – which features in Samsung’s Galaxy smartphones, as well as Apple’s iPhone and iPad – is cutting edge. But the firm decided to sell because it was losing ground to larger rivals in the smartphone market.

“There is a big war going on between the giants of the semiconductor industry like Qualcomm, Intel and Samsung to deliver the complete solution into smartphones,” chief executive Joep van Beurden said yesterday.

“I believe that under Samsung’s ownership the handset operations will be in a better position to prosper in the global handset market.”

Shares in the FTSE 250-listed firm jumped 35 per cent on the news, making CSR the day’s biggest riser on the London market.

“Disposing of the handset business where CSR has been struggling to remain competitive looks to be a good move,” said Singer Capital Markets.

Following the deal around 310  staff will transfer to Samsung, while the South Korean firm has agreed to invest $34.4m (£22m) for a 4.9 per cent stake in the remainder of CSR.

In addition to acquiring the development team Samsung will gain 21 patents and a royalty-free, non-exclusive licence to use the relevant chips in perpetuity.

Van Beurden said CSR could now focus its attention on areas where it was already successful, such as voice, music and in-car devices.

Its technology is used in high-end headphones such as those made by Sennheiser and the bestselling “Beats by Dr Dre” range.

The company intends to return up to $285m to shareholders following the transaction, which is expected to complete in the fourth quarter.

Brian Park, semiconductor analyst at Tong Yang Securities, said that until now Samsung’s growth in the mobile sector had been driven by its strength in memory chips.

“With this development, Samsung has set up a foundation to bolster its non-memory capabilities,” he said.

“Access to CSR’s patents could also serve as a buffer in future patent disputes.”

Samsung and Apple are waging legal battles in multiple countries, accusing each other of patent infringement as they vie for supremacy in the global mobile device market.

“By leveraging CSR’s R&D capability, Samsung will strengthen its application processor platform and solidify its position as a leading semiconductor solutions provider,” said Stephen Woo, Samsung’s president of System LSI Business, Device Solutions.

ADVISERS CSR AND SAMSUNG

JP MORGAN CAZENOVE

JP MORGAN Cazenove advised on the deal for CSR, with a team led by Rupert Sadler. The Cambridge graduate previously worked at NM Rothschild & Sons before joining the bank in January 2006 and becoming a managing director in the telecom, media and technology team within the corporate finance division.

Also in JP Morgan team was Dwayne Lysaght, who advised News Corp on its aborted bid for control of BSkyB in 2010. Last month he helped complete a deal to sell Dairy Crest’s French spreads business to a private equity firm for around £350m.

James Robinson, another managing director at the investment bank, was also involved.

Sadler and Robinson know CSR well, having previously advised on the firm’s 2011 merger with Zoran Corporation.

Slaughter and May acted as CSR's legal counsel on yesterday’s deal, alongside Wilson Sonsini Goodrich & Rosati. James Melville-Ross at FTI Consulting handled press communications for the Cambridge firm.

Samsung were advised by Evercore Partners International, while Paul Hastings acted as the South Korean firm’s legal counsel.