Will Dialog Semiconductor Scoop Up Synaptics?
An offer in the realm of our fair value estimate would represent a sufficient premium for current shareholders of no-moat Synaptics.
On June 19, Synaptics (SYNA) confirmed it is in discussions to be acquired by Dialog Semiconductor. We note that reports surfaced on June 8 of the two engaging on a possible combination, after Synaptics previously rejected an all-cash offer of $59 per share from Dialog back in March, a price that implies a 40% premium to Synaptics' opening price on June 8. Although both firms are heavily exposed to the smartphone space (Dialog supplies power management chips for Apple's iPhone and Synaptics provides touch, display, and fingerprint solutions to a bevy of major smartphone players, including Apple and Samsung), we don't see any obvious synergies between the product portfolios. Consequently, we believe a potential merger would be primarily to create a better diversified business with superior scale. Apple's inventory management has had a negative impact on each firm, with Synaptics' shares falling considerably in 2017 when its display driver chips weren't used in the OLED-display iPhone X and Dialog shares dropping more recently after Apple noted it would slash orders for power-management chips by 30% this year as Apple begins dual-sourcing efforts for Dialog's product. Shares of Synaptics jolted roughly 11% during after-hours trading and continue to trade at a discount relative to our unchanged fair value estimate of $64 per share. We remain positive on Synaptics' prospects to diversify into the "Internet of Things," with recent acquisitions of its own (Conexant and Marvell's multimedia solutions business) driving growth with chips sold into products such as the Amazon Echo. We believe an offer in the realm of our fair value estimate would represent a sufficient premium for current shareholders of no-moat Synaptics.
Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.
Abhinav Davuluri does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.