DTS sold for $850 million

Tessera Technologies will acquire DTS for about $850 million. Under the deal, San Jose, California-based Tessera (NASDAQ: TSRA) will pay $42.50 per share — a 28 percent premium on the Calabasas audio firm’s 30-day volume weighted average price as of Sept. 19 — in an all-cash transaction.

The combined company will bring together DTS’ audio and Tessera’s imaging expertise for complementary products, technologies, customer channels and intellectual property assets in the realm of smart sight and sound.

DTS (NASDAQ: DTSI) audio solutions for the mobile, home and automative markets include DTS-HD and DTS:X codecs, DTS Headphone:X and DTS Sound pre- and post processing solutions, DTS Play-Fi wireless audio and HD Radio. Meanwhile, through its FotoNation, Invensas and intellectual property businesses, Tessera develops and licenses technologies that ship globally in billions of devices.

They will employ 450 engineers, and the combined company forecasts pro forma 2016 revenue of approximately $450 million, nearly half of which will come from product licensing, with approximately $100 million in pro forma cash and investments on hand.

Tessera also expects the transaction to be immediately accretive to its earnings per share and free cash flow, realizing $15 million in annualized cost synergies within the first 12-18 months following the close of the transaction as well as revenue synergies from the expansion of markets and leveraging of complementary customer channels and technologies.

The acquisition “will represent a transformational step in the execution of Tessera’s strategic vision, with exciting new product development and marketing opportunities,” said Tessera CEO Tom Lacey in a statement.

DTS Chairman and CEO Jon Kirchner will join Tessera as president of the combined company.