Contact: Tejas Venkatesh
A year after attempting to go public, iWatt has opted for the other exit, selling to fellow power management chip vendor Dialog Semiconductor for $310m in cash (plus contingent consideration of up to $35m). The deal should bolster Dialog’s product portfolio and expand its addressable market.
IWatt designs AC-DC converter chips and LED ICs. While iWatt’s AC-DC chips are used in portable chargers, Dialog’s power management ICs are embedded in mobile devices themselves. The target has grown at a healthy clip recently, wrapping up 2012 with $74m in revenue. That’s a 46% increase from the previous year.
The acquisition values iWatt at 4.1 times last year’s sales. That’s a premium valuation compared with the 3.4x sales valuation its chief rival Power Integrations currently garners in the public markets. IWatt’s superior growth definitely played into its higher valuation (Power Integrations grew just 2.2% last year).
IWatt tried to go public last summer, but the offering never made it to market. (The company even swapped out its lead underwriter – trading Deutsche Bank for Barclays – which is never a good sign.) It would have been fighting against a strong downdraft in the recent IPO market. The last three tech offerings have either priced below expectations or traded down significantly in the aftermarket.
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