Qualcomm Inc. share price up, agrees to buy U.K. chipmaker CSR Plc

Qualcomm Inc. agreed to buy the UK bluetooth specialist CSR, as the U.S. wireless-technology group aims to expand into the fast growing Internet-of-Things industry.

Qualcomm reported that CSRs board has accepted a cash offer of 900 pence a share, a premium of 37% compared to Tuesdays close. People familiar with the matter suggested that Qualcomm approached CSR about a deal last month, when news related to Microchip’s takeover offer leaked.

The agreement provides opportunities for both companies to develop technologies that will give them an edge in the battle for the fast growing area of connected devices, such as light bulbs and health sensors, which CSR Chief Executive Joep Van Beurden said were “becoming more an extension of the smartphone.”

Mr. Van Beurden also said that the deal seems logical because it fuses Qualcomm and CSRs strengths. A win-win situation for both, one has advanced SIM and smartphone technology and the other produces chips that when mounted on a object can connect with phones.

“In the future, you’re going to connect basically everything and everybody to your smartphone” Mr. Van Beurden said in an interview cited by the Wall Street Journal.

CSR is one of the first companies developing devices using Bluetooth wireless technology. Its experience in the field made it an attractive target for chipmaker companies, as the market for internet-of-things may grow to $7.1 trillion by 2020 from $1.9 trillion in 2013, according to researcher IDC.

CSR has been in the connecting business for five years. In 2009 it worked closely with Nokia Oyj on its handsets and has since then focused on technology that connects devices to phones and to the Internet.

Both companies were not shy to discuss the matter as the two counterparts made positive comments about working together in the future. CSR Chairman Ron Mackintosh said that the offer is highly attractive because it provides CSR shareholders with an immediate and certain value.”

Quaclcomm stated that the agreement is expected to be finalized by the end of summer 2015 and predicted that the acquisition will boost earnings per share in the fiscal 2016 year.

Qualcomm Inc. climbed 1.63% on Tuesday to $71.86 on the NASDAQ and rose by 0.08% on Wednesday to $71.92 by 14:55 GMT, marking a one-year change of +5.50%. The company is valued at $120.44 billion. According to the Financial Times, the 33 analysts offering 12-month price targets for Qualcomm Inc. have a median target of $85.00, with a high estimate of $100.00 and a low estimate of $50.00. The median estimate represents a 18.29% increase from the previous close of $71.86.