Microsemi Corp of Aliso Viejo, CA, USA (which designs and makes analog and RF devices, mixed-signal integrated circuits and subsystems for communications, defense & security, aerospace and industrial markets) has entered into a definitive agreement to acquire Vitesse Semiconductor Corp of Camarillo, CA, USA for $5.28 per share through a cash tender offer (representing a premium of 32% based on the average closing price of Vitesse's common stock during the 30 trading days ended 17 March). Vitesse's board of directors unanimously recommends that its stockholders tender their shares in the offer. The total transaction value is about $389m.
In addition to its silicon-based products, Microsemi also provides RF, microwave and millimetre-wave products includes high-reliability diodes, power transistors, limiters, detectors, switches, low-noise amplifiers, power amplifiers and integrated multi-function modules based on silicon carbide (SiC), silicon germanium (SiGe), gallium arsenide (GaAs), gallium nitride (GaN) and indium phosphide (InP).
Vitesse designs high-performance semiconductors, application software and integrated turnkey systems solutions for carrier, enterprise and Internet of Things (IoT) networks. Products enable the fastest-growing network infrastructure markets including mobile access/IP edge, enterprise cloud access, and industrial-IoT networking.
"This acquisition is further evidence of Microsemi's continuing commitment to grow as a communications semiconductor company," says Microsemi's chairman & CEO James J. Peterson. "Vitesse's highly complementary technology suite will expand our product offering and accelerate growth with differentiated technology in emerging markets, while benefitting from the increased scale, consolidated infrastructure and cost savings of the combined entity," he adds.
"Microsemi will be able to leverage Vitesse's Ethernet technology and capabilities further into the communications market and has the scale to implement the adoption of our industrial IoT strategy," comments Vitesse's CEO Chris Gardner.
Microsemi expects the acquisition to yield significant synergies and to be immediate accretive in the first full quarter after completion (and accretive by $0.16-0.20 per share in its first full fiscal year to end-September 2016).
The tender offer is subject to customary conditions, including the tender of at least a majority of the outstanding shares of Vitesse's common stock on a modified fully diluted basis and certain regulatory approvals but is expected to close in Microsemi's fiscal third quarter (ending 28 June). No approval of the stockholders of Microsemi is required. Terms of the agreement have been unanimously approved by the boards of directors of both Microsemi and Vitesse. Microsemi has received support agreements from stockholders holding about 22% of Vitesse's outstanding common shares, in which they have agreed to tender their shares.
Under the terms of the merger agreement, Vitesse (assisted by financial advisor Deutsche Bank) may solicit superior proposals from third parties for a 'go shop' period of 21 calendar days continuing through 7 April. The agreement also provides Microsemi with a customary right to match a superior proposal, as well as break-up fees payable to Microsemi if the agreement is terminated.
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