Alphawave Finalizes £1.8 Billion Acquisition by Qualcomm

Alphawave IP Group, a UK-based chip design firm, has finalized its acquisition by Qualcomm for £1.8 billion, following multiple extensions to the takeover deadline.

Shareholders of Alphawave will receive 183p per share, nearly double its market price prior to Qualcomm’s announcement of interest in April.

This cash offer increased Alphawave’s stock price by 24%, or 35p, reaching 185p on the London Stock Exchange, surpassing the proposed takeover amount.

In light of acquisition interest from firms including Arm Holdings, Alphawave engaged with its financial advisors to assess strategic sale opportunities.

The Canadian firm, which was once the largest North American company to list in London during the so-called “class of 2021” at 410p per share, has seen its value decline by more than two-thirds since its debut.

Alphawave specializes in designing chips for semiconductors produced by companies such as Taiwan Semiconductor Manufacturing Company and Samsung.

Recently, the firm has pivoted towards creating custom chip designs and is transitioning to offer complete chip solutions directly to American tech firms for use in their expansive data centers. Its technology facilitates quicker and more efficient data transmission while consuming less power.

Qualcomm, a San Diego-based entity valued at around $163 billion on the Nasdaq, specializes in semiconductor intellectual property and primarily earns revenue through licensing its chip designs. Its share prices remained stable during pre-market trading.

Qualcomm previously put forth two alternative all-share offers to Alphawave’s shareholders after being granted extensions by the UK’s takeover panel. As part of the agreement, shareholders have the choice to exchange their shares for newly issued Qualcomm stock instead of the cash option.

Under the guidance of Jan Frykhammar, Alphawave’s board has endorsed the acquisition to its shareholders. Tony Pialis, CEO and co-founder, mentioned in March his objective to develop a leading semiconductor enterprise akin to Arm’s leadership.

Pialis commented that this acquisition signifies an important milestone and a chance to collaborate with a highly regarded industry leader. He expressed optimism that the merger of resources and expertise will enhance their product range, broaden their customer reach, and strengthen technological capabilities.

Alphawave was supported by Goldman Sachs and BMO during the acquisition process, while Qualcomm partnered with Evercore Partners.

Cristiano Amon, CEO of Qualcomm, stated that the integrated teams aim to innovate advanced technological solutions and advance connected computing capabilities across various rapidly growing sectors, including data center infrastructure.

Facing challenges of profitability, Alphawave has previously released performance warnings, with short-sellers heavily betting against the company just before interest in the takeover surfaced. Short-seller activities have since diminished.

The acquisition is anticipated to conclude in the first quarter of next year, pending regulatory approvals from the US, Germany, South Korea, Canada, and the UK.

The announcement of the Qualcomm deal coincided with Alphawave’s completion of selling its stake in WiseWave, a joint venture with Wise Road Capital, back to existing state shareholders.

Analysts from Jefferies indicated they foresee minimal regulatory issues arising from this acquisition, especially following Alphawave’s divestiture from WiseWave, predicting a successful conclusion at the proposed bid price within the anticipated timeline.