Piper Jaffray: QCOM / ATHR Acquisition Makes Sense For Both Companies

Noting yesterday's report that Qualcomm

was in talks to acquire Atheros Communications, Inc.

for $45/share, Piper Jaffray said it believes the combination makes sense for both companies. “ATHR is nearing a $1B annual run rate and there is a significant chasm to reach $2B,” Piper Jaffray writes. “Combining with QCOM provides ATHR with the needed resources to drive growth. It makes QCOM a dominant provider of connectivity silicon in wireless and wireline. Increasingly we believe connectivity is the critical component not the CPU. “Finally, we see the combination as complementary as QCOM dominates the ultramobile market and ATHR is a significant supplier of silicon for home networking. With the run up in the shares and the possibility of a takeout at $45, we are raising our price target to $45 and lowering our rating to Neutral. We do not believe there is another likely acquirer.” Qualcomm closed Tuesday at 50.97; Atheros Communications closed at $44.00.