A bidding war for chip maker PMC-Sierra may be brewing, with Microsemi announcing a $2.4 billion offer on Monday that tops an earlier bid from Skyworks Solutions.
Microsemi’s $11.50-per-share proposal represents a premium of roughly 50% to PMC’s closing price on Oct. 5, the day before the proposed $2 billion acquisition by Skyworks was announced.
PMC shares were trading Monday at $11.64, up more than 13%. Microsemi was down 5.4%, at $35.34, while Skyworks was down 2%, at $77.90.
“We expect to prevail because our proposal is far superior and will deliver more value to PMC shareholders,” Microsemi CEO James Peterson said on a conference call. PMC needs “a stronger, more definitive management team that could take the company to the next level, and that’s what Microsemi does.”
The boards of both Skyworks and PMC-Sierra have approved Skyworks’ deal, which was expected to close in the first half of 2016. Microsemi said its proposal, if accepted, could close as soon as late December if PMC’s directors were to act quickly.
“A bidding war may ensue,” Gary Mobley, an analyst at the Benchmark Co., wrote in a note to investors, citing the value of PMC’s assets to both Microsemi and Skyworks.
As The New York Times reports, the semiconductor industry has lately been experiencing a wave of consolidation as companies move to increase scale and product offerings to better serve electronics manufacturers, while at the same time cutting costs.
This year alone, NXP Semiconductors agreed to buy Freescale for $11.8 billion, Avago agreed to buy Broadcom for $37 billion, and Intel agreed to buy Altera for $16.7 billion.
PMC-Sierra makes chips that control drives in network equipment, data-center storage systems and mobile-phone networks. Microsemi manufactures chips for the communications, security, aerospace and industrial markets.
“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,” Peterson said in a news release.