Cypress Semiconductor agreed with Broadcom to acquire its Internet of Things (IoT) unit and related assets in an all-cash $550 million deal, while separately its founder and CEO TJ Rodgers (pictured below) is stepping down in favour of “new blood”.
Under the terms of the Broadcom deal, Cypress will acquire its Wi-Fi, Bluetooth and Zigbee IoT product lines and intellectual property, along with its Wiced brand and developer ecosystem.
Broadcom’s IoT business unit, which employs approximately 430 people worldwide, generated $189 million in revenue during the last twelve months.
The acquisition strengthens Cypress’ position in key IoT markets, such as automotive and industrial, while establishing it as a leader in the consumer market, a segment that includes wearables and home automation solutions.
The transaction, which has been approved by the boards of both companies, is expected to close in the third quarter of 2016, subject to customary conditions and regulatory approvals.
Cypress expects the transaction to be accretive within a year of closing and to improve its gross margin, earnings and long-term revenue potential.
“Cypress is a significant player in IoT today because of our ultra-low-power PSoC programmable system-on-chip technology, but we’ve only been able to pair it with generic radios so far,” said CEO TJ Rodgers.
“Now we have the highly regarded Broadcom IoT business—state-of-the-art Wi-Fi, Bluetooth and Zigbee RF technologies—that will transform us into a force in IoT and provide us with new market opportunities as well,” he said.
However, Rodgers himself is not hanging around to see events unfold. Separately he issued a statement that he is stepping down this week. The 68-year-old said he did not plan to spend most of the last decade of his career “immersed in the details of the operations, including those of the 7,000-person company that Cypress has become.” He founded Cypress 34 years ago.
“And, to be completely candid, the board and even the executive staff have urged me to bring new blood into operations. Thus, the first-quarter 2016 report, my 120th as Cypress’ CEO, will be my last,” he said. Rodgers however will continue to work on key technology projects for Cypress.