Shares of chip designer Integrated Device Technologies Inc. (Nasdaq: IDTI) plunged as much as 15 percent after it announced it would acquire PLX Technology Inc. (Nasdaq: PLXT) for $330 million.
By the close, IDTI shares had fallen 64 cents to $6.13, or 9.5 percent, as those of PLX soared 66 percent to $6.66 up $2.68.
IDTI, of San Jose, Calif., agreed to purchase PLX for a 76 percent premium, or $7 a share, plus accounting for Tuesday's surge.
Separately, IDTI also said it plans to acquire private Fox Electronics of Fort Myers, Fla., for $30 million.
Both acquisitions are intended to bolster IDT, founded in 1980, one of the pioneer Silicon Valley designers of analog mixed-signal chips that are the bedrock of digital communications.
IDTI CEO Ted Tewksbury said the combination puts together semiconductor companies with complementary strengths and should be accretive to earnings within a year.
Still, PLX, of Sunnyvale, Calif., has the right to solicit a higher offer for the next 30 days. Such deals are termed go shop offers. Its financial adviser is Deutsche Bank, whereas IDTI's adviser is JPMorganChase.
Analysts had mixed views on the deal. At Wedbush Securities, analyst Betsy Van Hees maintained an Outperform rating on IDTI but said she was somewhat negatively surprised by such a large acquisition. She's scheduled to meet IDTI management on Thursday.
At Cannacord Genuity, analyst Bobby Burleson kept his Buy rating on IDT despite some questions but also said the enlarged company should add to synergies.
IDTI also reported fourth-quarter results that exceeded analyst estimates. Net income was 5 cents a share, 3 cents above expectations, as revenue was $119 million, or $2 million ahead of estimates. Cash and investments were $325.4 million.