MIPI C-PHY v1.2 D-PHY v2.1 RX 2 trios/2 Lanes in TSMC (16nm) for Automotive
Microsemi Corporation Reiterates its Superior $11.88 Per Share Cash and Stock Bid for PMC-Sierra, Inc.
ALISO VIEJO, Calif., Nov. 2, 2015 -- Microsemi Corporation (Nasdaq: MSCC), a leading provider of semiconductor solutions differentiated by power, security, reliability and performance, today announced it is disappointed the PMC-Sierra board of directors has chosen not to deem its $11.88 per share bid a Superior Proposal. Microsemi's acquisition proposal would provide PMC shareholders $9.04 in cash and 0.0771x of a Microsemi common share for each PMC common share held at the close of the transaction. The implied enterprise value is $2.3 billion, net of PMC's net cash balance as of Sept. 27, 2015.
A PMC-Sierra press release issued yesterday suggested the stock portion of Microsemi's bid was the reason its proposal was not deemed to be a Superior Proposal by PMC's board. Microsemi highlights that less than one-quarter of its merger consideration is in the form of stock. Since its Oct. 19 press release and conference call discussing Microsemi's interest to acquire PMC, Microsemi has been transparent with its shareholders regarding the strategic and financial benefits of the transaction as well as the nature and structure of the financing. The current trading price of Microsemi's shares reflects the market's understanding of and appreciation for the merits of a combination of Microsemi with PMC.
In response to the PMC board's position with respect to the stock portion of the merger consideration, contemplated in Microsemi's acquisition proposal, the company notes the following:
- Capital markets are inherently volatile, but Microsemi has executed in that market environment over the last five years and delivered superior returns, with less overall business volatility due to its unique end market mix.
- Microsemi is followed by 11 sellside analysts that maintain an average price target of $42.18 per share, a 16 percent increase over where the stock closed today, Nov. 2, 2015.
- Microsemi has seen a 17 percent appreciation since the beginning of September due to investor focus on Microsemi's uniquely diversified, defensible market position. The company feels this is also due to the execution it has delivered in growing its portfolio of products and realizing leverage of scale in its business. Microsemi further believes its stock has appreciated as a result of previously disclosed record bookings, backlog and revenue levels.
- Microsemi has explained the leverage the company will have pro forma for the acquisition of PMC and has conveyed its ability to aggressively pay down this debt level and grow EBITDA. At close, it is expected to have a total debt to trailing pro forma EBITDA of 4.5x, achieving 3.5x in 12 months and 3.0x in 18 months. This is based on its ability to execute on its current business, deliver the synergies identified, and generate strong cash flow.
- Microsemi has an impressive track record of delivering value for its shareholders in acquiring 12 companies since the beginning of fiscal year 2010 and growing its EBITDA at a 22 percent CAGR over that time.
With respect to timing and deal certainty, Microsemi believes its proposal is clearly more attractive than the alternative with Skyworks:
- Microsemi has completed the acquisition of seven public companies since 2006. On average, the company has closed these transactions 40 days after entering into a definitive merger agreement.
- In contrast, Skyworks has completed the acquisition of one public company, Advanced Analogic Technologies, Inc. ("AATI"), over the past 10 years. That transaction required regulatory approval in Korea but not in China (as would its acquisition of PMC) and ultimately closed more than seven and a half months after it was announced. During the interim period between sign and close, Skyworks accused AATI of breaching its merger agreement, entered into arbitration in the Chancery Court of Delaware and ultimately reduced the consideration to AATI's shareholders versus what had been agreed to at announcement.
- Based on Microsemi's proposed exchange offer structure, the company believes it would be in a position to close on the acquisition of PMC approximately two months after it signs a merger agreement.
"We reiterate our proposal offers superior value to PMC's shareholders, and Microsemi is uniquely positioned to realize significant synergies," said James J. Peterson, Microsemi's chairman and CEO. "Our offer is more strategic, offers more speed and certainty in terms of the closing approval process, and delivers a higher per share price than the Skyworks offer. Shareholders receive cash now as well as the opportunity to participate in the significant upside potential of a global analog and mixed-signal leader with a highly diversified platform for growth and profitability. While the PMC board has chosen to determine that our proposal is not superior, we hope that the PMC shareholders will express their concern over this decision as well as the board's decision to raise the break-up fee with Skyworks by more than 26 percent, a move which is clearly not in the shareholders' best interest."
Microsemi looks forward to updating shareholders on Thursday, Nov. 5, 2015 at 4:45 p.m. EST with its quarterly earnings call where it will report on the company's fiscal 2015 fourth quarter, its fiscal 2015 full year results, and its outlook for its fiscal 2016 first quarter.
About Microsemi
Microsemi Corporation (Nasdaq: MSCC) offers a comprehensive portfolio of semiconductor and system solutions for communications, defense & security, aerospace and industrial markets. Products include high-performance and radiation-hardened analog mixed-signal integrated circuits, FPGAs, SoCs and ASICs; power management products; timing and synchronization devices and precise time solutions, setting the world's standard for time; voice processing devices; RF solutions; discrete components; security technologies and scalable anti-tamper products; Ethernet solutions; Power-over-Ethernet ICs and midspans; as well as custom design capabilities and services. Microsemi is headquartered in Aliso Viejo, Calif., and has approximately 3,600 employees globally.
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