Resonant Shares Jump 260% on Murata Acquisition News

Shares of Resonant Inc. (RESN, Financial) skyrocketed nearly 260% during Tuesday’s extended trading session following the announcement that Murata Electronics North America Inc., a wholly-owned subsidiary of Kyoto, Japan-based Murata Manufacturing Co., Ltd. (MRAAY, Financial), agreed to acquire the company for about $300 million, or $4.50 per share in cash.

Based in Austin, Texas, Resonant is a leader in transforming the way radio frequency (RF) front-ends are being designed and delivered for mobile handset and wireless devices. The combination will allow both companies to expand their offerings and to access additional markets and customers. Resonant will become a wholly owned subsidiary of Murata, which already owns 4% of Resonant, and will continue with its innovative development designed to solve some of the world’s toughest RF challenges.

The acquisition is expected to close by the end of March 2022, subject to certain regulatory approvals. The Wall Street community is “cautiously optimistic" about the stock, with a Moderate Buy consensus rating based on one buy rating and one hold rating, according to TipRanks. At the time of writing, the average price target for Resonant was $5.38, which implies 337.4% upside potential compared to the price of around $1.60 that the stock was trading at prior to the acquisition announcement.

The deal “will combine Murata’s world-leading mobile RF product capabilities with Resonant’s best-in-class XBAR filter solutions and world-class team of talented engineers,” said Norio Nakajima, President of Murata, in a statement. “Resonant invented its proprietary XBAR technology, which is expected to achieve higher frequency and superior performance to other filter technologies.”

Murata, a supplier for Apple (AAPL, Financial), has collaborated closely with Resonant for many years on the development of proprietary circuit designs using Resonant’s XBAR technology, and Resonant licensed rights for products to Murata in multiple specific radio frequencies in connection with their commercial partnership. Nakajima said he was confident that Resonant’s innovation will be a key strategic differentiator for the mobile industry. “This transaction will deepen our existing partnership and position us to better meet our customers’ needs and expand opportunities for Murata.”

“Murata is a global leader in RF modules and filters, and we are excited to build upon the successful partnership we’ve had together,” George B. Holmes, Chairman and CEO of Resonant, noted. The combination of Murata’s leading products with Resonant’s leading edge XBAR filter technologies is expected to advance their combined ability to deliver best-in-class products to the RF front-end market. "As part of the Murata team," Holmes said “we are looking forward to accelerating the integration of our XBAR technology into the Murata RF roadmap and delivering solutions with optimum RF performance. We have tremendous respect for Murata and look forward to accomplishing great things together.”

Nakajima added that he and his management team believe the acquisition will enhance Murata’s advanced RF front-end capabilities and “the world’s best” filtering technology in the 3~9GHz frequency range, key areas for the growing integration of mobile technologies. The radio requirements of smartphones and other wireless devices continue to grow more complex. XBAR filter technology delivers the ability to solve the complexities created by these next generation network requirements. Murata and Resonant “will provide a strong portfolio of Intellectual Property Rights covering the entire XBAR technology.”

The transaction, which has been approved by both companies’ boards of directors, is expected to close by the end of March 2022, subject to the tender of a majority of Resonant’s shares, certain regulatory approvals and other customary closing conditions. Centerview Partners LLC served as lead financial advisor to Resonant. Stifel also served as financial advisor to Resonant. Stubbs Alderton & Markiles, LLP and Proskauer Rose LLP served as legal advisors to Resonant.