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On Semiconductor's $1 Billion Bet on Quantenna Communications

On Semiconductor, one of the bigger players in analog and power semiconductors, said it would pay more than $1 billion to buy Quantenna Communications, which sells WiFi chips and software used in routers and other electronic devices. On Semiconductor plans to combine its efficient power management with Quantenna's WiFi technologies to sell a broader range of low-power connectivity solutions for cars and factories.

"The acquisition of Quantenna is another step towards strengthening our presence in industrial and automotive markets," said Keith Jackson, On Semiconductor's chief executive, in a statement on Wednesday. The company could end up using the deal to broaden its connectivity chip portfolio. On Semiconductor currently sells radio frequency transceivers supporting short and long range protocols, including Bluetooth, ZigBee, and SigFox, among others.

Quantenna, which was founded in 2006, designs chips that take advantage of multiple-input, multiple-output - more commonly called MIMO - technology. The chips support advanced beamforming, which results in higher throughput, longer range and higher reliability WiFi connectivity. The San Jose, California-based company, which currently employs 415 people, has shipped more than 200 million chips to over 40 manufacturers in the last decade.

On Semiconductor said that it would pay $24.50 per share for Quantenna. The equity value of the deal is around $1.07 billion. After accounting for Quantenna's $136 million of cash on hand at the end of the fourth quarter last year, the deal's enterprise value comes out to $936 million. The acquisition is subject to approval by Quantenna's shareholders and other customary closing conditions. The deal is projected to close in the second half of 2019.

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