Microsemi Offers to Buy PMC-Sierra in $2.4 Billion Deal

The California chip maker Microsemi Corporation said on Monday that it had offered to acquire its fellow chip maker PMC-Sierra in a cash-and-stock deal valued at about $2.4 billion.

The offer, in the form of a letter to PMC-Sierra’s board of directors on Monday, came as Microsemi sought to derail a competing proposal from Skyworks Solutions, a rival chip maker and supplier to Apple.

Skyworks, based in Woburn, Mass., offered to buy PMC-Sierra for $2 billion in cash this month.

Under the terms of its offer, Microsemi said it would be willing to pay about $11.50 in cash and stock for each share of PMC-Sierra, representing a 50 percent premium to PMC-Sierra’s closing price the day before the Skyworks offer was announced.

Microsemi said that it believed its offer was superior to the Skyworks proposal and provided PMC-Sierra with “substantial premium and immediate cash value.”

“Based on extensive discussions with PMC over the past 18 months and comprehensive analysis, we believe this transaction offers compelling strategic and financial benefits for the shareholders of both Microsemi and PMC,” James J. Peterson, the Microsemi chairman and chief executive, said in a news release.

“This acquisition will provide Microsemi with a leading position in high performance and scalable storage solutions targeted for data center and cloud applications, while also adding a complementary portfolio of high-value communications products,” he added.

The deal would be subject to regulatory and shareholder approval.

PMC-Sierra, based in Sunnyvale, Calif., makes semiconductors for telecommunications networks and data storage. Founded in 1984, it posted revenue of $526 million in 2014 and has about 1,450 employees worldwide.

There has been a wave of consolidation in the semiconductor industry in recent years as chip makers look to increase their scale and product offerings to better serve Apple and other electronics makers, while cutting their costs.

This year alone, Intel, the world’s largest maker of chips; Avago Technologies; and NXP Semiconductors have made multibillion-dollar acquisitions.

In May, Avago agreed to acquire Broadcom, whose chips are used in iPhones and other consumer devices, for $37 billion, while June, Intel agreed to pay $16.7 billion for the chip maker Altera. In March, NXP Semiconductors agreed to buy Freescale Semiconductor for $11.8 billion.

Under the terms of Microsemi’s offer, PMC-Sierra investors would receive $8.75 in cash and 0.0736 of a share of Microsemi stock for each share they hold in PMC-Sierra.

PMC-Sierra shareholders would own about 15 percent of the combined company, with the remainder owned by Microsemi investors, Microsemi said.

Microsemi said its proposal, if accepted, could close as soon as late December if PMC-Sierra’s directors were to act quickly.

Once the deal goes through, Microsemi said, it expects to achieve more than $100 million in annual cost savings.

Microsemi, based in Aliso Viejo, Calif., manufacturers semiconductors for a variety of industries, including the aerospace, communications, defense, security and industrial sectors. It posted sales of $1.14 billion in 2014 and has about 3,600 employees worldwide.

Stifel and the law firm O’Melveny & Myers LLP are advising Microsemi on its offer.

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