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Skyworks and Microsemi Compete to Acquire PMC-Sierra

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Acquisition deal

On October 5, 2015, Skyworks Solutions (SWKS) announced that it is looking to acquire peer company PMC-Sierra (PMCS) for $2 billion in cash. As per the deal, shareholders of PMC-Sierra would receive $10.50 per share, a 37% premium compared to its closing price of $7.67 on Monday, October 5, 2015.

CEO (chief executive officer) of Skyworks David Aldrich stated, “Specifically, we plan to leverage PMC’s innovative storage systems, flash controllers, optical switches, and network infrastructure solutions to expand our engagements with some of the world’s leading OEMs and ODMs as well as emerging hyperscale data center customers.”

Microsemi (MSCC) also competed with Skyworks to acquire a controlling stake in PMC-Sierra by offering $11.50 per share ($8.75 in cash plus $2.75 in stocks) on October 19, 2015. Following this announcement, shares of PMC-Sierra rose 14% to close at $11.73.

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Revised offer

In the last week of October 2015, Skyworks raised its price bid to acquire PMCS by 10.4%, from $10.50 per share to $11.60 per share. Subsequently, Microsemi raised its cash-stock bid offer by 3.7% from $11.50 per share to $11.88 per share ($9.04 in cash and $2.84 in stocks).

Skyworks’ share price rose 15.2% between October 29 and November 6, 2015, to close at $85.99 on November 6.

While Skyworks’ offer values PMC-Sierra at ~$2.2 billion, Microsemi’s offer values it at ~$2.3 billion. PMC-Sierra said that Skyworks’ all-cash offer provided greater value to shareholders against Microsemi’s cash-stock offer.

Benefits to Skyworks

Skyworks’ acquisition of PMC-Sierra will support an increase in its revenues by diversification into segments such as data center and telecommunication. Currently, Skyworks is focused on providing services in the technology, defense, and industrial sectors.

Skyworks makes up 3.3% of the iShares PHLX Semiconductor ETF (SOXX) and 2.9% of the VanEck Vectors Semiconductor ETF (SMH).

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