Skyworks Ups Deal for PMC to $2.27 Billion in Bidding War

PMC’s board determined that the new offer is superior to a proposal by Microsemi Corp. earlier this month for $8.75 in cash plus 0.0736 share, Santa Clara, California-based PMC said in a statement.

Following the revised deal, PMC’s…

The bids place the competing offers for PMC-Sierra, based in Sunnyvale, Calif., in the neighborhood of $2.3 billion to $2.4 billion. On October 5, Skyworks agreed to buy PMC for $10.50 a share, for what was then a 37 percent premium. More than $90 billion in semiconductor deals are pending or have been completed this year worldwide, according to data compiled by Bloomberg.

The Woburn, Mass.-based Skyworks, which generates a big chunk of its revenue from China, has been battered lately as concerns over growth in China have intensified.

RBC analyst Mitch Steves maintains that the Microsemi offer is 25% accretive to 2017 earnings, which would add $1 a share to EPS.

PMC-Sierra makes chips that control drives in network equipment, data-center storage systems and mobile-phone networks.

At present, Microsemi shares are trading down 2.94% at $35.70, whereas PMC shares are trading up 2.49% at $11.93, as of 1:09 PM EDT.

As previously announced, Skyworks intends to fund the acquisition with cash on hand from the combined companies and with fully committed debt financing. Under the terms of Microsemi’s proposal, PMC stockholders would receive $9.04 in cash and 0.0771 of a share of Microsemi common stock for each share of PMC common stock held at the close of the transaction.

The companies see the deal closing in the first half of 2016, subject to PMC shareholder approval, receipt of regulatory approvals and other customary closing conditions.