Microchip to buy Microsemi for $8.35 billion

March 05, 2018 // By Peter Clarke
Microcontroller and mixed-signal company Microchip Technology Inc. (Chandler, AZ) has agreed a deal to purchase mixed-signal, power, RF and FPGA vendor Microsemi Corp. (Aliso Viejo, CA) for $8.35 billion.

Microchip is well known as the vendor of PIC microcontroller range while Microsemi dates back to 1959 when it was founded as Microsemiconductor. The company has grown repeatedly by acquisition and merger and over time manouvered into FPGA and timing circuit sales. In 1991 it acquired a facility in Ennis, in county Clare Ireland with a competency in the development, manufacturing and high reliability testing of semiconductors to meet stringent aerospace, satellite, medical and security standards.

Microsemi manufactures FPGAs and system ICs for defense and aerospace, communications, industrial and data center applications.

Microsemi had full fiscal year 2017 sales of $1.81 billion, up 9.5 percent from the $1.65 billion reported in the 2016 fiscal year, which ended September 30. This compares with Microchip's fiscal 2016 sales were $2.173 billion.

The cash deal at $68.78 per Microsemi share represented a small premium over Microsemi's share price which jumped from about $64 to more than $67 on the announcement.

Microchip plans to finance the transaction with approximately $1.6 billion of cash from the combined company balance sheets, approximately $3.0 billion from Microchip's existing line of credit, approximately $5.0 billion in new debt and a $0.6 billion bridging loan.

The deal is subject to the approval of Microsemi shareholders but has been approved unanimously by both boards of directors. With approval and subject to customary regulatory approvals and other closing conditions, the transaction is expected to close in 2Q18.


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