Microsemi offers $2.2 billion for PMC-Sierra, trumping Skyworks bid

[October 19, 2015] (Reuters) - Chipmaker Microsemi Corp offered to buy PMC-Sierra Inc for about $2.2 billion, trumping a $2 billion offer by Skyworks Solutions Inc.

PMC-Sierra shares rose 11 percent to $11.38 in premarket trading on Monday, below Microsemi's offer price of $11.50.

Microsemi, which makes chip equipment and provides software for cloud data, said the deal would help it provide scalable storage services for data center and cloud applications.

Microsemi said the total value of the deal was $2.4 billion.

The company is offering PMC-Sierra shareholders $8.75 in cash and 0.0736 of its shares for each share held.

Microsemi shareholders will own about 85 percent of the combined company, with PMC-Sierra's shareholders owning the rest.

Skyworks, a supplier of Apple Inc, said on Oct. 5 that it would buy PMC-Sierra for $10.50 per share in cash.

Microsemi, which made the offer in a letter to PMC-Sierra's board on Friday, said the deal was expected to add 60 cents to its adjusted earnings per share in the first year after the transaction closes.

The company expects to achieve more than $100 million in annual cost synergies, of which over $75 million is expected in the first full quarter after the deal closes, it said.

The deal is expected to close in December.

Microsemi said in March it would buy Vitesse Semiconductor Corp for $389 million.

Morgan Stanley Senior Funding Inc is providing committed financing for deal, Microsemi said.

Stifel is Microsemi's financial adviser for the deal, while O'Melveny & Myers LLP is its legal adviser.

Microsemi shares closed at $37.36 on Friday, while Skyworks shares closed at $79.60.

(Reporting by Kshitiz Goliya and Devika Krishna Kumar in Bengaluru; Editing by Anil D'Silva and Kirti Pandey)

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