Lattice Semiconductor Corp, the fabless designer of in-system programmable logic devices, has turned out to be the buyer of Advanced Micro Devices Inc’s Vantis Corporation. Yesterday, Hillsboro, Oregon-based Lattice agreed to acquire Vantis for $500m in cash. Lattice’s rival Xilinx Inc had been rumored as a potential suitor. Based on last year’s proforma financial results, the combined revenues of the two companies would have been around $400m.
Vantis, the wholly-owned programmable logic subsidiary of AMD, was spun-off as a subsidiary at the beginning of 1997, with the intention of giving it the flexibility and focus of a small company. But the unit was put up for sale in February of this year, when its parent company issued a profit warning for its first quarter (CI No 3,592). Although Vantis’ revenues were essentially flat last year, the market for programmable logic devices in general is picking up, driven by strong demand from communications and networking equipment system makers.
Lattice president and CEO Cyrus Y Tsui, called the acquisition a major strategic move. With significantly expanded R&D and sales organizations, we will now be able to increase new product developments and deliver higher density programmable solutions to customers sooner. He said Lattice’s recently announced BFW programmable chips, combined with Vantis’s 3.3 volt Mach products would offer customers a broader choice. AMD said the divestiture of Vantis would strengthen its balance sheet and allow it to focus on its core, Intel-compatible CPU business.
The price includes the assumption of Vantis’s net cash and cash equivalents, expected to be around $60m at closing, which Lattice expects to happen before the end of its fiscal second quarter in September 1999. The deal, to be accounted for as a purchase, will be financed through a combination of cash in hand, bank borrowing and other sources, Lattice said, with AMD and Lattice making a mutual 338(h)10 tax election that will allow acquisition-related goodwill to be tax deductible for Lattice.
