Image copyright Reuters

US chipmaker Qualcomm has agreed a cash deal to buy UK counterpart CSR for $2.5bn (£1.6bn).

This equates to 900 pence a share. CSR shares rose 30% to 855p after the deal was announced.

Analysts said the news may encourage other chipmakers to make a bid for the British company.

CSR, formerly known as Cambridge Silicon Radio, rejected a takeover approach from US firm Microchip Technology in August.

The Qualcomm deal was announced on the same day the UK Takeover Panel had set as a deadline for any agreement between CSR and Microchip Technology.

Qualcomm is the world's largest chipmaker, and is keen to get its hands on CSR's expertise in Bluetooth wireless technologies.

"Combining CSR's highly advanced offering of connectivity technologies with a strong track record of success in these areas will unlock new opportunities for growth," said Qualcomm boss Steven Mollenkopf.

CSR chairman Ron Mackintosh said the deal represented a "very attractive outcome for shareholders, customers and employees".