Chinese chipmaker RDA receives $890 mn buyout offer from Tsinghua Unigroup

China's state-owned Tsinghua Unigroup Ltd has tabled an $18 per American depositary share (ADS) bid for chipmaker RDA Microelectronics Inc, topping an earlier $15.50 per ADS offer from state-owned Shanghai Pudong Science and Technology Investment Co Ltd, made on 27 September.

Each ADS represents six ordinary shares of RDA Microelectronics.

The $890-million offer represents a premium of 16.3 per cent to RDA's  close of $15.55 on the Nasdaq Stock Exchange yesterday.

Zhao Weiguo, chairman and president, Tsinghua Unigroup, said in a letter to RDA's board, "Our proposed price of $18.00 per ADS represents a 16.13% premium to the $15.50 per ADS offer received by the Company on September 27th, 2013. Our proposal of $18.00 per ADS also represents a premium of 51.55% to the same 60 trading day volume-weighted average closing ADS price referenced in the non-binding offer received by the Company on September 27th, 2013."

He also said that in addition to the large premium it is offering, it believes that an acquisition by Unigroup, which is majority owned by Tsinghua University, would provide excellent strategic synergies and position the company for compelling value creation in key wireless communications markets in China and elsewhere.

Tsinghua said it may consider financing a portion of the aggregate purchase price with debt funding and it would provide a guarantee for full funding by Tsinghua Holdings Co. Ltd., Tsinghua Unigroup's controlling shareholder, if a definitive agreement materialised.

This guarantee for full funding would apply to any equity or debt financing that may be required for the Acquisition.

RDA's board said that it is continuing to review and evaluate both the Unigroup and the Shanghai Pudong proposals.

RDA is a fabless semiconductor company that designs, develops and markets wireless system-on-chip and radio-frequency semiconductors for cellular, connectivity and broadcast applications.

The Shanghai-based company's product portfolio currently includes baseband, radio-frequency front-end modules, power amplifiers, transceivers, Bluetooth system-on-chip, Wi-Fi, Bluetooth and FM combo chips, FM radio receivers, set-top box tuners, analog mobile television receivers, CMMB mobile television receivers, walkie-talkie transceivers and LNB satellite down converters.  

It has more than 1,100 customers, including Huawei Technologies, ZTE Corp and Lenovo Group Ltd.