Acquisition broadens Dialog's presence in the IIoT market

Headquartered in Santa Clara, California, Adesto has approximately 270 employees and an established portfolio of industrial solutions for smart building automation that fully complements Dialog’s manufacturing automation products. Adesto’s solutions are sold across the industrial, consumer, medical, and communications markets.

“This acquisition substantially enhances our position in the Industrial IoT market,” said Jalal Bagherli, CEO of Dialog. “Adesto’s established strength in connectivity solutions and highly optimised products for building and industrial automation perfectly complements and adds scale to our Industrial IoT portfolio from the recently acquired Creative Chips. Adesto’s deep customer relationships, comprehensive system expertise, and proprietary technology will deliver enhanced value for Dialog customers.”

“Together with Dialog, we are positioned to create unique Industrial IoT solutions through the integration of our best-in-class technologies for today’s increasingly connected world,” added Adesto’s CEO, Narbeh Derhacobian. “We are extremely pleased to join Dialog to bring more value to our combined customer base.”

Benefits of transaction

Bringing Dialog and Adesto together creates a complementary product portfolio for servicing a broad customer base in growth segments of the industrial market and enables cross-selling.

The combination:

• Scales Dialog’s IIoT sector capabilities by combining industrial connectivity, smart metering and building automation solutions, and access to more than 5,000 customers, the majority of which are new for Dialog
• Complements Adesto’s industrial wired connectivity portfolio with Dialog’s wireless portfolio (BLE, WiFi) for smart building and industrial applications. Cloud-connectivity adds further differentiation to Dialog’s existing Industrial solutions 
• Enables full system solutions for wearables, hearables, and other IoT applications by combining Adesto’s low power specialty memory products with Dialog’s BLE and WiFi connectivity and True Wireless Stereo (TWS) Audio ICs
• Unlocks future growth in the Automotive market by qualifying Adesto’s specialty memory products by leveraging Dialog’s established Automotive production and test flow. Additionally, these products address the emerging, fast-growing AI segment
• Adds engineering and design scale to expand Dialog’s existing custom IC business making Dialog one of the largest custom analog mixed-signal semiconductor providers

Transaction structure and terms

Dialog will acquire Adesto for $12.55 per share in cash, or for approximately $500m enterprise value. The deal will be funded from Dialog’s balance sheet.

The transaction is expected to be EPS accretive1 for Dialog within the first calendar year following close. Dialog expects annual cost synergies of approximately $20m within the first calendar year of close across the combined company. Dialog also anticipates considerable additional revenue synergies given the complementary nature of the product portfolios and technology. Adesto expects to report FY 2019 revenue of approximately $118m and continued revenue growth is anticipated over the next few years.

The transaction is subject to certain regulatory approvals and customary closing conditions and is expected to close in the third quarter of 2020.

The Board of Directors of Adesto has unanimously approved the transaction and recommends that Adesto stockholders vote in favor of the transaction, and directors and executive officers of Adesto have agreed to vote their shares in favor of the transaction.

Hogan Lovells is serving as Dialog’s legal counsel, while BMO Capital Markets is serving as financial advisor. Fenwick & West LLP is serving as legal counsel for Adesto, with Cowen & Company, LLC serving as financial advisor.