Skyworks Solutions Inc. (SWKS)

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WSJ: "Skyworks Pares Reliance on Apple"
"Chip company is paying $2.75 billion to acquire Silicon Labs’ infrastructure and automotive business"

"Skyworks SWKS 4.09% is paying $2.75 billion to diversify its business away from Apple Inc. AAPL 1.80% Wall Street thinks the chip maker is getting a bargain.

Skyworks, which specializes in radio-frequency chips that filter out interference for smartphones and other wireless devices, is spending that much in cash to acquire the infrastructure and automotive business from Silicon Laboratories. SLAB 6.88% The deal will give Skyworks more exposure to such hot markets as electric vehicles, 5G equipment and data centers. It will also lessen its exposure to smartphones—and Apple in particular. The tech titan accounted for 56% of Skyworks’ revenue for the fiscal year ended Oct. 2.

But diversity has its price. The deal represents Skyworks’ largest acquisition on record and is more than double its last reported cash balance of $1 billion, requiring the currently debt-free chip maker to lever up."

"Still, the acquired business brings operating margins of close to 40%, leading Karl Ackerman of Cowen to project that the deal will add about 5% to Skyworks’ per-share earnings by next year. The company told analysts Thursday that it expects to delever quickly in the first 18 months after the deal closes. As an added plus, the deal doesn’t require seeking approval from China—which has been a major obstacle to chip mergers involving U.S. companies. Skyworks’ stock price jumped 4.1% on Friday."

https://www.wsj.com/articles/skyworks-pares-its-reliance-on-apple-11619269201