China-backed PE firm buy Lattice Semiconductor for $1.3b

According to a statement, Canyon Bridge will acquire all outstanding shares of Lattice for approximately $1.3 billion, including debt, or $8.30 per share in cash. The price represents a 30% premium to Lattice's last trading price before the deal was announced.

Founded in 1983, US-based Lattice makes high-performance programmable chips used in consumer electronics, industrial equipment, communication infrastructure and the automotive industry. Revenue came to $406 million - of which more than 50% came from Asian markets - last year, up from $266 million in 2014. However, it recorded a net loss of $159 million in 2015 compared to a net profit of $49 million in 2014.

"Lattice's low-power FPGA [filed-programmable gate array] franchise, along with its video connectivity and wireless solutions, making it a compelling, strategic investment," Ray Bingham, founding partner of Canyon Bridge, said in the statement. "We expect the company will continue to leverage its existing customer relationships with major OEMs [original equipment manufacturers] globally, while further broadening the role of technology solutions and accelerating its strategic plans."

Canyon Bridge was founded by Benjamin Chow and Raymond Bingham. Chow has previously held senior roles in China Reform Fund Management - a PE firm sponsored by China Reform Holdings and other central state-owned enterprises - Beijing Leading Capital, SIG China and Warburg Pincus. The firm, which received its initial funding from Chinese LPs, is looking to make control investments in technology companies and support expansion in growth markets.

The Lattice deal is expected to close in early 2017, pending approval from shareholders and regulators including the Committee on Foreign Investment in the US (CFIUS). Upon completion of the transaction, Lattice will be an independent subsidiary of Canyon Bridge and Lattice's senior management team will continue to lead the business.

Semiconductor assets in the US have attracted considerable interest from Chinese investors. Unigroup, backed by Tsinghua Holdings, is the best-known serial investor in this space. However, not all deals win CFIUS approval. For example, Unigroup scrapped its plan to invest in US-based disk drive manufacturer Western Digital after regulators decided to investigate the deal.

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