Silicon Laboratories (NASDAQ:SLAB) Plans To Acquires Sigma Designs Inc (NASDAQ:SIGM)

Silicon Laboratories (NASDAQ:SLAB) announced recently that it’s in the process to reach a definitive agreement to obtain the Sigma Designs Inc (NASDAQ:SIGM) which is valued at $282 million cash transaction. In the process of acquiring the Sigma Designs, the company will also be allowed to take over its former Z-Wave-related IP and entire product portfolio, thus enabling Silicon Labs to expand its wireless connectivity solutions for smart homes. The deal is expected to close in the Q1 2018 once all the demands of the stakeholders from both firms are met.

Furthermore, the firm will also have a great influence on the development of the new Z-Wave technology from now onwards. However, the terms of the acquisition agreement stipulate that in case the deal doesn’t go through successfully, Silicon Lab may opt to purchase only the Z-Wave segment for $240 million.

If the deal closes, Silicon Labs will take over various Sigma’s Strategic Business Units including the Smart TV, Sigma’s STB, Media Connectivity, and IoT or Z-Wave businesses. However, according to Silicon Labs, Sigma’s Smart TV and Media Connectivity SBUs are not strategically related to its future plans, hence would consider not acquiring them.

Sigma Design has plans to divest its Smart TV and Media Connectivity units and it’s in the process of negotiating with Silicon Labs as one of the potential buyers. Currently, there is no single dominant of wireless technology available for IoT, home automation, industrial and more applications. Majority of the device manufacturers on the market adopt diverse protocols such as Bluetooth, Wi-Fi, Z-Wave, Thread, ZigBee, and much more.

Hence, according to Tyson Tuttle, CEO at Silicon Labs, the addition of Z-Wave technology to the company’s connectivity portfolio will enable them to strategically position their services to the fast-growing market. It’s therefore essential for Silicon Labs to obtain a single major supplier of Z-Wave transceivers as they seek to expound on their customer base and enhance their presence in the growing market.

Furthermore, the addition of Z-Wave technology will give more options for developers and ecosystem providers who will avail more alternatives for the end users and market.

Brown Terrel

Brown Terrel

Terrel is US Markets Daily's business news reporter. She joined US Markets Daily after five years as a print reporter.