Macom Technology to buy Applied Micro Circuits for $770m

Macom Technology Solutions has agreed to buy connectivity and computing solutions company Applied Micro Circuits Corp in a deal valued at around $770m.

Macom will pay approximately $8.36 per share, consisting of $3.25 in cash and 0.1089 Macom shares per Applied Micro share. The price represents a premium of 15.4% over the company’s closing price of $7.25 on Friday.

Paramesh Gopi, president and chief executive officer of Applied Micro, said: “This transaction will create an industry powerhouse with the scale, deep customer relationships, innovative technology, and enabling products that will help deliver explosive growth in Enterprise and Cloud Data Centers.

“In addition, this agreement provides a promising path forward for the Compute business, which is in the process of bringing AppliedMicro's highly-competitive third-generation X-Gene processor to market. X-Gene is well-positioned to address the large opportunity for mainstream server processors with its proven high performance cores, scalable interconnect and high per socket memory capabilities."

Macom said it plans to divest Applied Micro’s Compute business within 100 days from closing the transaction, as it does not “strategically align” with its long-term focus.

The company said Applied Micro has been exploring strategic options for the Compute business and there is known strategic interest among several potential buyers and investors.

At 1400 GMT, Applied Micro shares were up 10% in pre-market trade to $7.95, while Macom shares were down 3.6% to $45.28.