Semtech to buy Sierra Monolithics for $180 million

Semtech to pay $180 million in cash to buy fellow chip maker Sierra Monolithics

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SAN FRANCISCO (AP) -- Semiconductor maker Semtech Corp. said Wednesday that it agreed to buy fellow chipmaker Sierra Monolithics Inc. for $180 million in cash.

Semtech said that it will pay Sierra shareholders $180 million when the deal closes. It will get $8 million worth of Sierra employees' existing unvested options and will grant employees equity incentives valued at up to $12 million.

Semtech, which is based in Camarillo, Calif., said it will pay for the acquisition with cash reserves and expects to book a related one-time tax charge of $33 million in the third quarter of 2010. Semtech expects the purchase to add to its earnings within a year of the deal's closing.

Sierra Monolithics, which makes chips for optical communications, microwave and wireless products, is based in Irvine, Calif. It has 110 employees. Semtech said Sierra stands to benefit from growing video traffic over the Internet, competition between cable operators and telecom carriers, cloud computing and wireless data services.

Sierra expects to report $50 million in revenue this year, and expects revenue to grow 20 percent to 30 percent next year. For the nine months ended Oct. 25, Semtech reported revenue of $201.5 million.