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Shares Soar Over 20% As CSR plc Considers Sale

Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

Shares in chipmaker CSR (LSE: CSR), formerly Cambridge Silicon Radio, flew up by more than 20% in early trade off the back of news that the company is mulling over a possible sale following various takeover bids from rivals in the semiconductor-manufacturing sector.

By hiring bankers to assess its options rather than dismissing the offers out of hand, CSR is showing that it is open to the possibility of a sale. Valued by the market at around £1.2bn, or $2bn, an eventual sale could see a 50% upside, with the Financial Times citing people “familiar with the matter” pitching a $3bn valuation.

CSR was a pioneer of Bluetooth technology and, as we increasingly immerse ourselves in an ‘internet of things’ world, stands to continue to profit from this trend, while most recently believed to have been working on indoor location technology.

CSR has almost four-bagged since the beginning of 2012, but has fallen victim to the share-price depression that befell much of the technology sector earlier this year. Prior to today’s leap in the shares, CSR was trading at a 20% discount to its levels six months ago, which would have made for an appealing entry price for interested parties.

No names of potential suitors have been formally made public yet, but Samsung already owns a 5% stake in CSR which it bought at the same time as purchasing the UK-based company’s wireless business in 2012, while Google has shown its interest in this field after buying the ‘smart’ thermostat business Nest at the beginning of the year for $3.2bn.

(Updated at 10.15am: CSR has named Microchip as a confirmed bidder, and has stated that it has rejected the proposed offer price. The board is now “considering its options for the company”.)

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Sam Robson has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.