MaxLinear Gains On Merger Deal With Entropic Communications

MaxLinear, Inc. MXL shares gained 5 percent Wednesday after it agreed to acquire a competitor for the equivalent of $287 million in cash and stock.

The company said late Tuesday it will acquire Entropic Communications, Inc. ENTR for $1.20 in cash and 0.22 shares of MaxLinear stock for each share of Entropic stock.

The deal values Entropic at about $3.01 a share. Entropic changed hands recently at $3.01, up 11 percent.

Entropic put itself up for sale in September in the face of struggles related to its $65 million deal to acquire Trident Microsystems' set-top box business out of bankruptcy in 2012.

Both MaxLinear and Entropic make computer chips for cable and satellite providers.

MaxLinear reaffirmed its forecast for the fourth-quarter results expected February 9, and said the Entropic deal will boost its adjusted earnings during the first full quarter following its closing.

The transaction is expected to be completed in the second quarter of 2015.

Operating "synergies" of more than $20 million are expected in the first full calendar year following the deal.

Increased scale and projected cost savings will result in lower combined operating expenses, and expand the company's margin, according to MaxLinear.

Entropic "adds immediate scale and deep customer relationships" in the satellite pay-TV market, according to MaxLinear's Chief Executive Kishore Seendripu.

Entropic's design talents and portfolio of 1,500 patents are "highly complementary, and MaxLinear is uniquely positioned to capitalize on these assets," Seendripu said.