Chipmakers Microsemi and PMC-Sierra have entered into a definitive agreement under which Microsemi will acquire PMC for USD 9.22 in cash and 0.771 of a share of Microsemi common stock for each share of PMC common stock through an exchange offer. The transaction is valued at approximately USD 2.5 billion and represents a 77.4 percent premium to the closing price of PMC’s stock on 30 September. “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,” said Microsemi chairman and CEO James Peterson.
The transaction is expected to be immediately accretive to Microsemi's non-GAAP EPS and free cash flow. Microsemi anticipates achieving more than USD 100 million in annual cost synergies with over USD 75 million of those expected to be realised in the first full quarter of combined operations. Microsemi currently estimates approximately USD 0.60 of non-GAAP EPS accretion in the first full year after closing the transaction.
Microsemi intends to fund the acquisition and repay its existing credit facility with existing cash, USD 2.7 billion in new transaction debt and USD 600 million in Microsemi common stock. At the completion of the acquisition, the shareholders of Microsemi and PMC will own approximately 85 percent and 15 percent, respectively, of the combined entity. The exchange offer is expected to close in the first quarter of 2016.
