British chip firm CSR has sold its mobile phone connectivity and location technology to Samsung for $310 million (£198m).
Under the terms of the deal, Samsung will get all of the resources devoted to the development of CSR's handset connectivity technology and a significant proportion of the resources dedicated to the development of its handset location technology, including 310 employees.
The deal will also transfer 21 US chip patents to Samsung, and will give it a perpetual, royalty-free licence to all CSR’s patents used in handset connectivity and location services.
Meanwhile, CSR will retain its existing handset connectivity and location products and the associated revenue, together with rights to use future connectivity and location technology in areas other than handsets and mobile devices.
CSR's board believes that the transaction will enable the company to focus on its key growth markets of audio, automotive, indoor location, imaging and Bluetooth.
“This transaction will accelerate our transformation into a higher gross margin platform company operating in attractive growth markets where we have a leading market position,” said Joep van Beurden, chief executive of CSR.
“As a result, we will be a more competitive, more differentiated and more profitable business.”
Samsung will also invest $34.4 million in buying a 4.9 percent stake in CSR at a price of 223p per share. Van Beurden said that the transaction would unlock material value for shareholders, who will also benefit from up to $285 million of returned capital.
He added that, under Samsung's ownership, the handset operations would be in a better position to prosper in the global handset market.
CSR's position in handsets has faltered in recent years because its chips have not been included in many fast-selling smartphones. However, the company has been trying to make up lost ground with a new Wi-Fi Bluetooth combination chip.
Its shares lost nearly half their value since the beginning of last year, leaving it with a market capitalisation of £434 million ($680m). However, shares were up 40 percent at 307p in early London trading on Tuesday, following news of the deal.