Fabless semiconductor company Sequans Communications S.A. (NYSE: SQNS) surged in morning trading on Monday after the company announced that it had signed a Memorandum of Understanding (MOU) with Renesas “subject to completion of the works council consultation, to initiate a tender offer transaction for Sequans to be acquired by Renesas.”
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Renesas has proposed to acquire all outstanding ordinary shares, including American Depositary Shares (ADS) of Sequans for $3.03 per ADS in cash, indicating a transaction value of $249 million, including net debt. The acquisition is expected to close in the first quarter of next year.
The company believes that its acquisition by Renesas would enable the company “to compete [better] in the Cellular IoT market.”
Meanwhile, Sequans’ losses widened in the second quarter to $0.10 per share as compared to a loss of $0.02 per share in the same period last year while analysts were expecting the company to report a loss of $0.12 per share.
The company’s revenues declined by 23% year-over-year to $9.2 million in Q2 and fell short of Street estimates of $10 million.
Georges Karam, CEO of Sequans commented, “Our second-quarter results reflect the expected delay in our production ramp, alongside a significant contribution from licensing revenue, which lifted our gross margin to 83%.”
SQNS stock has declined by more than 10% year-to-date.
