Cobham sells diode business to MACOM for US$38m

British defence and space technology firm Cobham has sold its Metelics diode business to US chipmaker MACOM for US$38m, after acquiring the assets last year as part of a larger deal. The move adds scale to MACOM’s business as semiconductor firms across the world continue to consolidate amid slowing growth and rising costs in the industry.

British defence and space technology firm Cobham (LSE:COB) has sold its Metelics diode business to US chipmaker MACOM (NASDAQ:MTSI) for US$38m, after acquiring the assets last year as part of a larger deal.

MACOM, which provides semiconductors for applications ranging from satellite to mobile devices, said the all-cash deal will extend its leadership position in radio frequency and microwave diodes.

The move will also add scale to MACOM’s business as semiconductor firms across the world continue to consolidate amid slowing growth and rising costs in the industry.

John Croteau (pictured), MACOM’s CEO, said: “We believe that the transaction will provide meaningful scale advantages for our diode business, and that once their facilities are fully integrated, MACOM will be able to drive beneficial COGS efficiencies that will make the transaction accretive to MACOM’s non-GAAP operating margins and earnings per share.”

The acquisition comes just a week after MACOM closed a US$60m all-cash deal to buy FiBest, a Japanese merchant market component supplier of optical sub-assemblies, giving it a sales channel in Japan and expanding its serviceable addressable market in data centres.

The Metelics business was part of Cobham’s advanced electronic solutions sector, having been acquired as part of its US$1.46bn deal for US RF semiconductor specialist Aeroflex last year.

That deal, closed in September 2014, was also aimed at building market presence and boosting exposure to higher growth commercial segments. Aeroflex is known for building space qualified and radiation hardened products for the satellite communications market.

The firm’s diode business posted about US$37m in revenue for the fiscal year ended 31 December 2014.

MACOM hired Ropes & Gray for legal advice for its latest acquisition. Cobham mandated Jaeckle Fleischmann & Mugel.

Elsewhere in the sector, California’s Fairchild Semiconductor recently agreed to be sold to Arizona-based ON Semiconductor for US$2.4bn despite reports of a higher offer, Anglo-German Dialog Semiconductor is facing competition for its US$4.6bn bid for US peer Amtel, and in November Microsemi won a fierce takeover war in the US to buy PMC-Sierra in a US$$2.5bn deal.

Meanwhile, US-based Qualcomm (NASDAQ:QCOM), which recently joined a US$500m funding round for Greg Wyer’s satellite broadband startup OneWeb, today decided not to split into a chipmaking and patent licencing business, following a strategic review.