Microsemi to buy PMC-Sierra for $2.5bn
California-based semiconductor solutions company Microsemi Corp has agreed to buy PMC-Sierra Inc in a cash and stock deal valued at around $2.5bn, the companies announced on Tuesday, hours after rival Skyworks said it would not be raising its bid again.
The race for PMC began at the beginning of October, when Skyworks made its first offer of $10.50 in cash.
Microsemi will pay $9.22 in cash as well as 0.0771 of a share for each PMC share through an exchange offer.
The deal, which is expected to be immediately accretive to Microsemi’s earnings per share and free cash flow, represents a 77.4% premium to the closing price of PMC’s stock as of 30 September.
Microsemi’s chairman and chief executive, James J. Peterson said: "We are pleased PMC has accepted our compelling strategic offer, which clearly benefits shareholders of both Microsemi and PMC. We can now shift our focus to realising the significant synergies identified during our comprehensive analysis.
“As we have previously stated, this acquisition will provide Microsemi with a leading position in high performance and scalable storage solutions, while also adding a complementary portfolio of high-value communications products.”
Peterson said the combined company will benefit from increased scale, industry-leading margins, diversified market exposure, consolidated infrastructure and substantial cost savings.
Microsemi expects to achieve more than $100m in annual cost synergies with over $75m of those likely to be realised in the first full quarter of combined operations.
Shareholders of Microsemi and PMC will own around 85% and 15%, respectively, of the combined entity post completion of the transaction.