Skyworks Solutions To Acquire PMC-Sierra For About $2 Bln

(RTTNews) - Chipmaker Skyworks Solutions Inc. (SWKS) has agreed to acquire smaller peer PMC-Sierra Inc. (PMCS) for about $2 billion in cash, the two companies said Monday. The deal marks further consolidation in the semiconductor industry, as chipmakers struggle with rising costs and weak revenue growth.

Under the terms of the deal, PMC-Sierra's stockholders will receive $10.50 in cash for each share of PMC common stock held by them at closing. The offer price represents a 37 percent premium to PMC's closing stock price as of October 5, 2015.

Sunnyvale, California-based PMC-Sierra makes chips that control drives in network equipment, data-center storage systems and mobile-phone networks.

In July, the company reported a loss for the second quarter that widened from last year on lower revenues. At that time, the company also initiated steps to reduce spending across the organization by about 14 percent, including a reduction in force of about 200 employees.

Woburn, Massachusetts-based Skyworks Solutions makes analog semiconductors for use in radio frequency and mobile communication systems.

Skyworks Solutions noted that the acquisition will strengthen its position as a highly diversified analog, RF and mixed signal semiconductor maker by significantly expanding its product portfolio, customer base and end-market applications.

The company also expects to capitalize on the explosive demand for high performance solutions that connect, transport and store Big Data.

David Aldrich, chairman and chief executive officer of Skyworks said, "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."

The boards of directors of both companies have approved the transaction, which is expected to close in the first half of calendar 2016 and is subject to PMC shareholder approval.

Excluding any non-recurring acquisition-related charges and amortization of acquired intangibles, Skyworks expects the acquisition to be immediately accretive to its adjusted earnings post-closing.

The company will finalize estimates of the transaction's financial impact as well as the accounting for the transaction upon closing of the deal.

For the fourth quarter of fiscal 2015, Skyworks forecasts adjusted earnings of $1.52 per share and about $880 million in revenue, based on preliminary estimates.

Among other recent deals in the semiconductor industry this year, UK-based chip maker Dialog Semiconductor Plc. (DLGNF.PK) has agreed to acquire Atmel Corp. (ATML) for about $4.6 billion.

Intel Corp. (INTC) has agreed to buy programmable chip maker Altera Corp. (ALTR) for about $16.7 billion.

Mixed signal solutions provider NXP Semiconductors N.V. (NXPI) will buy Freescale Semiconductor Ltd (FSL), also for about $16.7 billion.

In May, Avago Technologies Ltd. (AVGO) said it will acquire Broadcom Corp. (BRCM) for $37 billion.

PMCS closed Monday's trading at $7.69, up $0.26 or 3.5 percent on a volume of 6.05 million shares. In after-hours, the stock declined $0.02 or 0.26 percent to $7.67.

SKWS closed Monday's trading at $81.87, down $2.19 or 2.61 percent on a volume of 4.27 million shares. In after-hours, the stock added $0.12 or 0.15 percent to $81.99.