On Dec 21, Zacks Investment Research updated the research report on semiconductor manufacturer Anadigics, Inc. ANAD.
Anadigics recently revealed that it had received an offer from an undisclosed third-party firm to acquire all its outstanding shares for 48 cents a share. The offer is far superior to a similar buyout proposal from GaAs Labs, LLC – an investment firm specializing in communications, semiconductor and related markets.
In order to accelerate innovation and product development to fuel top-line growth in key target markets, Anadigics had earlier inked a definitive merger agreement with GaAs Labs. The merger agreement was probably an attempt to cut further losses and improve revenues. Synergistic benefits from the merger were likely to boost profitability through economies of scale and mutual sharing of manufacturing expertise, research and development costs and adjustment of staffing expenses.
Under the terms of the merger agreement, GaAs Labs was scheduled to acquire Anadigics for 35 cents per share, representing a premium of 38.2% based on the closing price as on Nov 11, 2015. Anadigics was expected to leverage GaAs Labs’ industry knowledge and proven track record to offer its customers a broader portfolio of innovative and valuable product offerings. On the other hand, with Anadigics on board, GaAs Labs was expected to tap new markets and drive its growth objective.
However, with the new buyout offer, management decided to terminate the merger agreement with GaAs Labs and consider another lucrative deal to revive its sagging bottom line.
Anadigics has been incurring losses over the last few quarters and its revenue has steadily deteriorated. Consequently, the company initiated corporate restructuring activities to reduce operating costs and better align its resources with the evolving demand for infrastructure-based products. The semiconductor chip industry is also witnessing sluggish growth despite healthy strides in the digital and telecommunications markets.
With a favourable buyout proposal, Anadigics is likely to improve its growth dynamics in the long term. We remain impressed with the continued efforts of this Zacks Rank #2 (Buy) stock to improve its growth trajectory. Some other better-ranked players in the industry include CEVA Inc. CEVA, Mellanox Technologies, Ltd. MLNX and Integrated Device Technology, Inc. IDTI, each carrying a Zacks Rank #1 (Strong Buy).
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