Ceva Climbs to Highest Since 2012 as ARM Deal Spurs Takeover Bet

  • Smaller chip designer seen as target after SoftBank ARM tie-up
  • Ceva has been investing in vision processors for auto safety

Ceva Inc., a chip designer that has been investing in vision-processing software for auto safety, rose to the highest level in more than four years on speculation it could become a takeover target for SoftBank Group Corp. following its acquisition of ARM Holdings Plc.

Japanese Internet giant SoftBank said Monday it will pay 24.3 billion pounds ($32 billion) to purchase ARM, the world’s biggest designer of semiconductors used inside smartphones, tablets, and e-readers. Ceva, whose software designs are used in cell phones and computers, rose 5.8 percent to $29.42 at 12:46 p.m. in New York, the highest since January 2012.

ARM has been expanding into automobiles and semiconductors used inside servers to help make up for plateauing demand for smartphone chips. Ceva has developed vision processing software that would allow its customers to bring new products to market quicker than its designs for the handset industry, said Matt Robison, a San Francisco-based analyst with Wunderlich Securities Inc.

“They’ve got architecture now for vision processing that could make them a lot more interesting for ARM,” Robison said. “It could be a potential growth enhancer, though it’s a small percentage of ARM’s size.”

Ceva, which has research and development facilities in Israel, reported $60 million in revenue last year, and trades at 33 times 12-month future earnings, compared with an industry average of 24, Bloomberg data show.

“We will miss ARM as a dominant player in the public intellectual property sector,” Alex Somech, a spokesman for Mountain View, California-based Ceva, said in an e-mailed response to questions. “It leaves us as the only publicly traded, independent, growing IP company in the space.”

He declined to comment on whether Ceva has had any deal discussions with ARM or SoftBank.

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