Synaptics Stock Plunges After Dialog Calls Off Merger Talks

(Bloomberg) -- Shares of touch-pad technology maker Synaptics Inc. plunged in extended trading after Dialog Semiconductor Plc said it terminated acquisition discussions.

The stock fell more than 13 percent to $43.30 following a one-line statement Tuesday by Dialog that didn’t explain why it dropped the pursuit of the U.S. company. If trading Wednesday follows that pattern, more than half of the gains posted by Synaptics stock this year will be erased.

Dialog shares rose as much as 7.5 percent in trading on Wednesday in Frankfurt.

The two companies are small chipmakers in a $400 billion industry that has been transformed by a spree of mergers and acquisitions over the last three years. The top 10 suppliers accounted for more than 60 percent of total chip sales last year.

Dialog had confirmed an earlier Bloomberg report that it was interested in Synaptics amid a challenging year for sales after its biggest customer, Apple Inc., cut orders for the company’s power-management chips used in the iPhone. The Reading, U.K.-based company warned that revenue will fall 5 percent in 2018 because of that.

Synaptics, based in San Jose, California, would have given Dialog an entryway into additional products, including smartphone sensors, touch screens and touch pads that are sold to companies like Apple and Samsung Electronics Co., according to data compiled by Bloomberg. The U.S. company will now have to find its own way to lift revenue. Analysts predict sales will decline 5 percent in the fiscal year.

As a trade war between the U.S. and China has escalated this year, the outlook has dimmed for a continued boom in semiconductor deals. Such transactions have been halted by administrators in both countries. The U.S. remains home to the biggest providers of semiconductors while China has become the biggest single market for the electronic components.

--With assistance from Molly Schuetz.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack

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