GSI Technology, a provider of static random access memory (SRAM) products incorporated primarily in networking and telecommunications equipment, has signed and closed definitive agreements with Sony Electronics under which GSI acquired substantially all of the assets related to Sony’s SRAM product line.
At closing, GSI paid Sony approximately $5.2m in cash. GSI will make a further cash payment to Sony of approximately $1.7m following a post-closing adjustment to reflect actual product inventory on hand at closing. GSI will also make future cash payments based on the sale of certain acquired SRAM products over an eight quarter period. The acquisition will reportedly be accounted for under the purchase method of accounting.
GSI said that the acquisition will not have an impact on its total revenues or, except for adjustments required by purchase accounting rules, on its operating results for the second fiscal quarter ending September 30, 2009.
Based on historical sales data and current sales projections, GSI believes that the new product line will generate additional revenues of approximately $1m in the third quarter ending December 31, 2009 and expects that the new product line should generate quarterly revenues of approximately $2m by the quarter ending September 30, 2010. GSI also expects that, after a transition period of one to two quarters, gross profit margins comparable to its overall gross margins will be achieved.
Lee-Lean Shu, chairman and chief executive officer of GSI Technology, said: “The acquisition of Sony’s portfolio of advanced SRAM products is an excellent strategic fit for GSI and strengthens our position as a leading supplier of high performance SRAM products. The acquisition further extends our broad SRAM product portfolio and provides us with additional scale to support our ongoing investment in research and development.”
