Silicon Labs acquires Redpine Signals' connectivity business to expand IoT market

Silicon Labs (NASDAQ: SLAB) announced that it has entered into a definitive asset purchase agreement with Redpine Signals to acquire the company’s Wi-Fi and Bluetooth businesses, its Hyderabad, India, R&D center, and extensive patent portfolio for $308 million in cash.

“The acquisition of Redpine Signals’ ultra-low-power Wi-Fi and Bluetooth products and extensive intellectual property portfolio will strengthen our leadership in wireless technology for the Internet of Things (IoT),” said Tyson Tuttle, CEO of Silicon Labs. “The addition of these products to our global sales and distribution network will further advance the smart home, industrial IoT and commercial markets for customers who want to quickly get to market with Wi-Fi-enabled connected devices.”

Wi-Fi 6 (802.11ax) is an important evolution of the Wi-Fi standard that meets the low power, performance, security and interoperability requirements of environments with hundreds or thousands of connected IoT devices. The integration of Redpine Signals' technology will accelerate Silicon Labs' Wi-Fi 6 silicon, software and solutions roadmap. The acquisition also includes Bluetooth Classic IP (including extended data rate) that can be used for audio applications such as wearables, hearables, voice assistants and smart speakers.

The acquisition of Redpine Signals includes a large-scale design center with approximately 200 employees in Hyderabad, India. The addition of Redpine's multidisciplinary, high-performing team will help Silicon Labs scale R&D more quickly and efficiently in one of the most talent-rich regions in India.

“My team is excited to join Silicon Labs to help build a smarter, more connected world,” said Venkat Mattela, founder and CEO of Redpine Signals. “Backed by two decades of advanced research in OFDM and MIMO systems, Redpine Signals has built highly differentiated, low-power, multiprotocol SoCs. Looking ahead, low-power Wi-Fi 6 will be a critical wireless technology for IoT device connectivity.”

Silicon Labs expects the transaction to add approximately $20 million in revenue in fiscal 2020, continue to grow IoT revenue at comparable gross margins, and be accretive to earnings per share on a non-GAAP basis in the second half of 2021. The transaction will increase non-GAAP operating expenses by approximately $15 million per year.

The boards of directors of both companies and Redpine Signals’ stockholders have approved the transaction, which is expected to close in the second quarter of 2020, subject to customary closing conditions. JP Morgan Securities LLC served as exclusive financial advisor to Redpine Signals.