More on Intersil-Techwell

Contact: Brenon Daly

We looked at Intersil’s purchase of Techwell on Thursday, primarily from the perspective of the senseless lawsuits that are swirling around the transaction. But fittingly for the largest acquisition of a US-based chip company since mid-2007, there’s a lot more that’s noteworthy about the deal. (Note: The equity value of the transaction is actually $450m, while the $370m figure in the announcement is the enterprise value.)

For starters, Intersil’s pickup of Techwell, which is expected to close in two months or so, is the sixth deal the chip company has inked in the past year and a half. (In another report, we noted some similarities in a pair of purchases that Intersil did back in 2008.) At $450m, the buy is the largest that Intersil has announced in a half-decade. The acquisition gets Intersil into two new markets: video security surveillance systems, where Techwell gets about 70% of its sales, and automotive displays, which accounts for the remaining 30%.

Also, the planned sale of Techwell represents the second exit at an above-market multiple in just three weeks for Technology Crossover Ventures (TCV). A late-stage investment firm, TCV owned chunks of both Techwell and RiskMetrics Group, which sold to MSCI Barra for $1.55bn at the beginning of March. TCV holds nearly 4.3 million shares of Techwell, according to the latest 13F filing with the SEC, meaning the firm stands to enjoy a $79m payday when the deal closes.

Intersil: Doubling down in Austin

Contact: Brenon Daly

Intersil’s purchase of Zilker Labs last week had more than a few echoes of its pickup of D2Audio last July: same buyer, same banker, same backyard and even a shared backer at the acquired company. Both Zilker Labs and D2Audio are based in Austin and drew venture money from Dallas-based Sevin Rosen. (We understand that Al Schuele, Sevin Rosen’s lone VC in Austin, participated in funding both companies.) On the exit, boutique firm Pagemill Partners advised both Zilker Labs and D2Audio.

Despite the similarities between the exits of Zilker Labs and D2Audio, the companies had virtually nothing to do with each other up until that point. D2Audio makes digital audio power amplifiers, and primarily serves the consumer market. We estimate that Intersil paid around $25m for D2Audio. Intersil’s more-recent purchase of Zilker Labs added power-management technology to its existing portfolio. We estimate that Intersil paid about $18m for Zilker Labs, which raised some $33m in backing.

Intersil’s 2008 acquisitions

Date Target Target’s headquarters
December 18, 2008 Zilker Labs Austin
September 30, 2008 Kenet Woburn, Massachusetts
July 28, 2008 D2Audio Austin

Source: The 451 M&A KnowledgeBase