Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Microchip to buy Microsemi for about $8.35 billion

Published 03/01/2018, 06:23 PM
© Reuters.  Microchip to buy Microsemi for about $8.35 billion
QCOM
-
MCHP
-
AVGO
-

(Reuters) - Microchip Technology (NASDAQ:MCHP) Inc said on Thursday it would buy Microsemi Corp, the largest U.S. commercial supplier of military and aerospace semiconductor equipment, for about $8.35 billion.

The deal comes amid a new wave of consolidation in the semiconductor industry that included Singapore-based chipmaker Broadcom (NASDAQ:AVGO) Ltd unveiling a $117 billion bid to acquire U.S. rival Qualcomm (NASDAQ:QCOM) Inc.

Aliso Viejo, California-based Microsemi supplies high-performance analog and mixed signal integrated circuits and semiconductors to the aerospace and defense, communications, data center and industrial sectors.

Microsemi, which has grown in the last few years through a wave of acquisitions, has said it wants to expand further in aerospace and defense.

Microchip currently gets about 2 percent of its annual sales from the aerospace and defense markets.

The deal would also strengthen Microchip's base in the computing and communications sectors, which together accounted for less than 15 percent of its full-year sales.

The transaction includes a $68.78 per share cash offer, representing a premium of about 7 percent to Microsemi's closing price on Thursday.

Shares of Microchip were up about 5 percent at $93.40 in extended trading, while that of Microsemi rose about 5 percent to $67.55, shy of the offer price.

Earlier this week, the Wall Street Journal reported that Arizona-based Microchip was in talks to buy Microsemi.

Microchip said on Thursday the deal, which is expected to close in the second quarter of 2018, would immediately add to its adjusted earnings per share.

The chipmaker expects an estimated savings of $300 million in the third year after the deal close.

J.P. Morgan, which is providing $5.6 billion in committed financing for the deal, was Microchip's financial adviser, and Qatalyst Partners advised Microsemi.

Microchip on Thursday also narrowed its net sales forecast for the fourth quarter ending March to a range of flat to down 2 percent, from up 1 percent to down 3 percent.

The company said it now expects adjusted earnings per share for the quarter to be at between $1.32 and $1.37, compared with $1.30 to $1.39 per share previously.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.