Microsemi deal takes Microchip over $50bn

By Nick Flaherty www.flaherty.co.uk

Microcontroller designer Microchip Technology is to buy Microsemi in a surprise $10bn deal that will take the combined company over $50bn in revenues.

The two have signed a definitive agreement acquire Microsemi for $68.78 per share in cash. The acquisition price represents a total equity value of about $8.35 billion, and a total enterprise value of about $10.15 billion, after accounting for Microsemi’s cash and investments.

“We are delighted to welcome Microsemi to become part of the Microchip team and look forward to closing the transaction and working together to realize the benefits of a combined team pursuing a unified strategy. Even as we execute a very successful Microchip 2.0 strategy that is enabling organic revenue growth in the mid to high single digits, Microchip continues to view accretive acquisitions as a key strategy to deliver incremental growth and stockholder value. The Microsemi acquisition is the latest chapter of this strategy and will add further operational and customer scale to Microchip,” said Steve Sanghi, Chairman and CEO of Microchip.

The deal particularly brings Microchip two new product categories - discrete devices and FPGAs.

"Joining forces and combining our complementary product portfolios and end market exposure will offer our customers a richer set of solution options to enable innovative and competitive products for the markets they serve,” said Ganesh Moorthy, President and COO of Microchip. The company's last chip deal was Atmel in 2016.

Microchip anticipates achieving an estimated $300m in savings in the third year.

Subject to approval by Microsemi stockholders and regulatory approvals, the deal is expected to close in the next three months.

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