Microsemi Says PMC-Sierra Prefers Its Bid Over Skyworks Pact

Microsemi Corp. said Tuesday that PMC-Sierra Inc. has declared its latest acquisition proposal is superior to PMC's agreement with Skyworks Solutions Inc., continuing the dueling negotiations between the semiconductor companies.

PMC-Sierra earlier this month had said Microsemi's cash-and-stock takeover offer, valued at $2.38 billion based on closing prices Monday, wasn't superior to a bid from Skyworks because the Skyworks all-cash $2.24 billion deal "provides more value certainty to shareholders" than the Microsemi proposal, which was "nominally higher."

Representatives from PMC-Sierra and Skyworks were unavailable for immediate comment Tuesday. On a per-share basis, Microsemi's offer is now valued $11.97, while Skyworks is at $11.60. PMC-Sierra closed Monday at $11.75.

PMC makes products for storage, optical and mobile networks. Skyworks is a semiconductor company, and Microsemi makes chip equipment and provides software for cloud data.

Under Microsemi's reiterated proposal, PMC shareholders will 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.

Microsemi said Tuesday that PMC-Sierra board has given written notice to Skyworks of its intent to approve or recommend the Microsemi proposal. PMC-Sierra can terminate the Skyworks merger agreement if Skyworks doesn't make, within three business days following the receipt of the notice, a superior proposal to Microsemi's bid.

Skyworks and PMC have said that their revised merger agreement includes a termination fee of $88.5 million. Skyworks has maintained that it plans to fund the acquisition with cash on hand from the combined companies and debt financing.

Microsemi also said Tuesday that it shortened the time to file an exchange offer with the Securities and Exchange Commission, in an attempt to try to consummate the deal by the end of 2015.

Microsemi has said that it sees the deal adding immediately to its adjusted earnings and free cash flow, thanks in part to more than $100 million in annual cost synergies. The company said the deal could add about 60 cents to Microsemi's per-share adjusted earnings.

PMC previously said Microsemi would be one of the most highly leveraged, publicly traded chip companies after taking into consideration a potential acquisition of PMC.

The latest offers represent more than a 50% premium to PMC's stock price when the first deal with Skyworks—valued at $2 billion, or $10.50 a share—was announced Oct. 5. Two weeks later, Microsemi unveiled its unsolicited bid worth about $2.22 billion.

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November 10, 2015 09:45 ET (14:45 GMT)

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