U.S. Qualcomm Inc. made a $2.5 billion offer to acquire British Bluetooth specialist CSR PLC as part of its plans to venture to the "Internet of things" business.
CSR's Chief Executive, Joep Van Beurden, deemed that being absorbed by the U.S. chipmaker will make the company stronger by merging smartphones and SIM technology with its specialization in Bluetooth technology and short-range radio technology, the Wall Street Journal reported.
Last week, CSR turned down Microchip Technology's offer for a better one, as it was expecting at least $3 billion, which others considered too expensive.
"It is highly complementary," Van Beurden said. "For us it provides CSR with additional [intellectual property], a clear link into these phone terminals and additional scale. For Qualcomm, it adds to them a market segment outside of the phone which shows very good growth potential."
Qualcomm's Chief Executive, Steven M. Mollenkopf, said that acquiring the technology of CSR would allow them to offer new products to the market, such as wireless home appliances and other internet-connected devices.
Qualcomm would like to explore other business opportunities because smartphone sales have been declining. Wireless-connected appliances are forecasted to dominate the houses of well-heeled consumers within eight years, according to the New York Times.
Now that Qualcomm has set the initial bid for CSR, analysts predict that other bidders will emerge to challenge the offer. But, the U.S. chipmaker seems to be a "good fit" for CSR.
"With a firm price now in the open, it could tempt others to play their hand," Jeffries analyst Robert Lamb said to Reuters.
The deal is expected to be finalized in 2015. It is indefinite if there are layoffs to happen after the acquisition because of the overlaps in both general and executive positions of the two companies such as Bluetooth, Global Positioning System and Wi-Fi divisions.
A CSR spokesperson confirmed that nonexecutive directors are expected to resign.
