Qualcomm (QCOM) Near Deal to Buy Atheros Communications (ATHR) for $45/Share

Grrr.... so frustrating. One of our mainstay holdings for the past 2 years -

Atheros Communications (ATHR)

looks like it will be bought out for Qualcomm for $3.5 Billion of $45/share. Not only do we miss out on the buyout but one less candidate for the future portfolio. Indeed I said in early December to keep an eye on this one. [

Dec 1, 2010: Keep an Eye on Atheros Communications

]

Bigger picture this is becoming an increasing problem for investors such as myself. A lot of the small to mid cap secular growth stories - namely in tech - are being snapped up or never make it public since the mega cap giants buy them all up - hence their big growth gets embedded in a much slower giant. Much like Xbox is stuck inside of Microsoft. (in that case of course, Xbox originated within MSFT but it's the same idea of a high growth arm of a slow plodding giant) I think this might be the reason the remaining independent high growth names have such a premium - scarcity value. There are so few domestic opportunities for secular growth, that for those that remain stand alone, people are willing to pay any premium. Atheros would not even be considered the cream of the crop in terms of growth like some of the other names that had ridiculous 2010 price appreciation, and probably have priced themselves out of being acquisition targets.

Per

NYT

Qualcomm is near a deal to buy Atheros Communications, a semiconductor manufacturing company, for about $45 per share, or $3.5 billion, according to two people with direct knowledge of the talks.
A deal could be announced as soon as Wednesday, said these people, who requested anonymity because they were not permitted to talk publicly about the deal. They added that the talks were in their final stages but could still fall apart.
The deal would represent a roughly 22 percent premium to where Atheros's stock traded midday on Tuesday. Atheros stock has jumped about 50 percent off its lows in September as the outlook for business and consumer spending has improved.
A purchase of Atheros would be Qualcomm's largest acquisition ever. Over the past year, Qualcomm, based in San Diego, has quietly sat on a pile of more than $10 billion in cash, while its rival Intel has gone on a buying spree. Last August alone, Intel spent nearly $10 billion acquiring McAfee, the antivirus software maker, as well as units of Texas Instruments and Infineon.
Atheros, based in Santa Clara, Calif., makes chipsets for a range of wired and wireless devices, including desktops, laptops and tablets. On Monday, it announced two new wireless products that bring Wi-Fi and Bluetooth technology to notebooks and tablets while reducing reducing power consumption and increasing the longevity of batteries in such devices.

[

Oct 26, 2010: Atheros Communications with Solid Report, but Guidance Soft

]

No position