VCs Cash Out in Flurry of Deals

Semiconductor companies had one of their biggest and most active M&A periods last week as six VC-backed chip companies were acquired.

Credence Systems Corp. (Nasdaq: CMOS) led the way when it acquired NPTest Holding Co. (Nasdaq: NPTT) for $660 Million. The cash and stock deal is a windfall for Sandy Robertson’s Francisco Partners and Philip Shah who acquired San Jose, Calif.-based NPTest from Schlumberger for $220 million in June of 2003.

Francisco Partners, which subsequently took the company public last December raising $175 million in the IPO, will thus make a two to three times return on its original investment after the sale is complete.

Meanwhile, Synopsys (Nasdaq: SNPS) announced two acquisitions, one for Monolithic System technology Inc. (Nasdaq: MOSY) in a $432 million stock and cash deal. The Monolithic deal appears to be a successful one for its VC-backers: West Coast Venture Capital, Integrated Device Technology, DynaTech Capital and TSMC.

In a separate transaction, Synopsys – a supplier of electronic design automation software – announced its acquisition of Accelerant Networks, a fabless semiconductor startup that makes mixed signal chips and which was backed by Mohr Davidow Ventures and Worldview Technology Partners. Synopsys acquired Accelerant for $22.5 million in cash. Investors pumped more than $40 million into the Beaverton, Ore., company, according to Thomson Venture Economics (publisher of PE Week).

Also busy last week was Magma Design Automation (Nasdaq: LAVA), which acquired Mojave Inc. in a deal worth $25 million in stock and cash on completion and as much as $115 million in total, based upon performance benchmarks over five years. Mojave was formed by a group of engineers from Avanti Systems, which was later acquired by Synopsys.

In the final transaction of the week, Fremont, Calif.-based Arasor Corp., a privately funded builder of photonic signal processors founded in 2001, announced it had acquired Lightbit. Lightbit, backed by Mayfield and Accel Partners, operates in the optical telecom sector. Lightbit has received over $20 million in finding since its 2000 inception, according to Thomson VE.

At the same time, Arasor announced it acquired IOA for an undisclosed amount, but which was reportedly in the “seven figures.” IOA, a startup backed by Mayfield and U.S.Venture Partners (USVP) builds optical amplifiers.

The transactions will allow Mayfield, USVP and Accel to preserve some of the value of the $10 to $15 million invested into Lightbit and additional funds invested into IOA, but the deal is best viewed as extending the VCs’ investments life by transferring IP rights and a limited number of personnel into another startup.