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Dialog Semiconductor [FRA:DLG], the UK-based provider of standard and custom mixed signal integrated circuits, will focus on bolt-on transactions, according to CEO Jalal Bagherli.

On the 4Q16 earnings call held 23 February, Deutsche Bank analyst Robert Sanders noted that billion dollar-plus deals had been off the table in 2016 and asked if Dialog would continue to focus on bolt-ons. Bagherli said he had spent a lot of time looking at potential acquisition targets in 2016 but had not found the right candidate to buy.

“We are looking at smaller acquisitions relative to what we tried prior to that,” the CEO said. “And that strategy will continue in 2017, so there will be bolt-on acquisitions that we look at.”

He noted that the company could not be certain of making any deals until it went through the due diligence and valuation process, adding that Dialog was wary of misspending its cash on assets that did not create value.

“As we scale up, you need to also consider that (M&A) scales up with us,” Bagherli continued.

He said what was previously considered a tuck-in deal was now just “noise” to Dialog, adding that with its increase in size, the company’s cash level and revenue growth were higher.

“So we will be looking at things which are bigger than say what we did three or four years ago potentially. But we're not looking, in terms of our scale, at major large scale acquisitions,” the CEO said.

In a March 2016 published report, Bagherli said the company remained interested in acquisitions, adding that any takeover would involve a company that was smaller than Atmel, a California-based rival that Dialog tried to acquire. The CEO said Dialog had learned its lesson after successfully finalising two smaller buys, but failing to nail down two larger transactions, the report said.

Dialog announced in September 2015 its agreement to buy Atmel for approximately USD 4.6bn. The deal lapsed in mid-January 2016, and the latter was subsequently bought by Microchip Technologies [NASDAQ:MCHP]

Dialog’s main reporting segments are: Mobile Systems, including power management, audio and display; Connectivity, such as Bluetooth Smart, short-range wireless VoIP and voice over DECT; Power Conversion, including AC/DC converters, solid-state lighting LED drivers and AC/DC chargers and adapters; and Automotive & Industrial, providing motor control ICs and control ASICs. Mobile Systems is the largest contributor to earnings, providing 82% of revenues, with the latter three segments providing 9%, 6% and 3%, respectively.

The company’s most recent transaction was a USD 10m investment in Energous Corporation [NASDAQ: WATT], a California-based developer of wireless charging technology.

Morgan Stanley advised Dialog on the attempted Atmel takeover, while RBC Capital Markets was used for the 2013 purchase of iWatt for around USD 310m. Jefferies advised on an earlier transaction.

Dialog used Davis Polk & Wardwell for the Energous deal, as well as for iWatt and the failed Atmel acquisition. UK-based RPC was also used for iWatt and Amtel, according to the Mergermarket M&A database.

Colin Sturt, Dialog’s General Counsel, previously worked at Davis Polk. Dialog’s 2015 annual report named RPC as the company’s legal advisor.

Dialog reported a cash balance of USD 697m at year-end. It has a market capitalization of EUR 3.8bn.