PMC-Sierra Finally Acquired by Microsemi for $2.5 Billion

Microsemi-PMCMicrosemi Corporation has entered a definitive agreement to acquire PMC-Sierra, Inc. for $2.5 Billion - $9.22 in cash and 0.0771 of a share of Microsemi common stock for each share of PMC common stock through an exchange offer. This represents a 77.4 percent percent premium to the closing price of PMC's stock as of Sept. 30, 2015.

PMC was originally offered $2 Billion from Skyworks solutions, which was followed by the offer from Microsemi for $2.5 Billion. After much debate and consideration, PMC decided to go with the offer from Microsemi. The termination of the initial agreement with Skyworks cost PMC $88.5 Million in termination fee.

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. As they integrate the team and drive profitability, thecombined company will benefit from increased scale, industry-leading margins, diversified market exposure, consolidated infrastructure and substantial cost savings.

The transaction is expected to be immediately accretive to Microsemi's non-GAAP EPS and free cash flow. Microsemi anticipates achieving more than $100 million in annual cost synergies with greater than $75 million of those expected to be realized in the first full quarter of combined operations. Microsemi currently estimates approximately $0.60 of non-GAAP EPS accretion in the first full year after closing the transaction.

Microsemi intends to fund the transaction and repay its existing credit facility with existing cash, $2.7 billion in new transaction debt and $0.6 billion in Microsemi common stock. Shareholders of Microsemi and PMC will own approximately 85 percent and 15 percent, respectively, of the combined entity post completion of the transaction.

This transaction is expected to close in the first quarter of calendar 2016.


  • Country: United States
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