Microchip to buy Microsemi for about $8.35 billion

Microchip Technologies makes the microcontrollers, or chips, in which go into simple electronic devices, among additional products. Cramer likes the Chandler, Ariz.-based semiconductor because in which has an attractive risk-reward in addition to pays a high dividend yield. At 4 percent, its dividend yield will be the highest in all the semiconductor space. In addition, Cramer said in which's likely to benefit coming from positive long-term trends. Demand from the wireless space will be growing, in addition to in which could benefit Microchip Technology. Crame

Photo: microchip.com

Microchip Technologies makes the microcontrollers, or chips, in which go into simple electronic devices, among additional products. Cramer likes the Chandler, Ariz.-based semiconductor because in which has an attractive risk-reward in addition to pays a high dividend yield. At 4 percent, its dividend yield will be the highest in all the semiconductor space. In addition, Cramer said in which’s likely to benefit coming from positive long-term trends. Demand from the wireless space will be growing, in addition to in which could benefit Microchip Technology. Crame

Microchip Technology said on Thursday in which might buy Microsemi, the largest U.S. commercial supplier of military in addition to aerospace semiconductor equipment, for about $8.35 billion.

The deal comes amid a completely new wave of consolidation from the semiconductor industry in which included Singapore-based chipmaker Broadcom Ltd unveiling a $117 billion bid to acquire U.S. rival Qualcomm Inc.

Aliso Viejo, California-based Microsemi supplies high-performance analog in addition to mixed signal integrated circuits in addition to semiconductors to the aerospace in addition to defense, communications, data center in addition to industrial sectors.

Microsemi, which has grown from the last few years through a wave of acquisitions, has said in which wants to expand further in aerospace in addition to defense.

Microchip currently gets about 2 percent of its annual sales coming from the aerospace in addition to defense markets.

The deal might also strengthen Microchip’s base from the computing in addition to communications sectors, which together accounted for less than 15 percent of its full-year sales.

The transaction includes a $68.78 per share cash offer, representing a premium of about 7 percent to Microsemi’s closing cost on Thursday.

Shares of Microchip were up about 5 percent at $93.40 in extended trading, while in which of Microsemi rose about 5 percent to $67.55, shy of the offer cost.

Earlier in which week, The Wall Street Journal reported in which Arizona-based Microchip was in talks to buy Microsemi.

Microchip said on Thursday the deal, which will be likely to close from the second quarter of 2018, might immediately add to its adjusted earnings per share.

The chipmaker expects an estimated savings of $300 million from the third year after the deal close.

J.P. Morgan, which will be providing $5.6 billion in committed financing for the deal, was Microchip’s financial adviser, in addition to Qatalyst Partners advised Microsemi.

Microchip on Thursday also narrowed its net sales forecast for the fourth quarter ending March to a range of flat to down 2 percent, coming from up 1 percent to down 3 percent.

The company said in which today expects adjusted earnings per share for the quarter to be at between $1.32 in addition to $1.37, compared with $1.30 to $1.39 per share previously.

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