CSR predators circle

CSR, a leading supplier of Bluetooth wireless solutions, rose 9.25p, or 2.9%, to 325p this morning after broker Dresdner Kleinwort said a range of bidders might be interested in the group in the medium term. CSR has seen its shares slump by two thirds over the past year, after the company issued several profit warnings and chief executive John Scarisbrick quit.

That leaves the cash-rich group valued at little more than £400m (US$790m), or three times EBITDA against its £316m enterprise value.

Some analysts believe margins will be hit in a more competitive environment. Last week the company reported flat operating profits at US$150m for last year despite revenues rising 20% to US$847m. CSR added that profits and revenues had risen in the fourth quarter and was modestly optimistic about the second half of the current year.

Now Robert Sanders of Dresdnet Kleinwort says that “CSR remains an attractive target for the likes of Atheros, Freescale or even NXP” adding that “private equity can’t be ruled out.” He believes that “at current valuations, there is value in the business as it stands today, even if we consider our ultra-bearish view as slowing Bluetooth penetration takes its toll”.