PMC-Sierra Said to Hire Financial Adviser to Seek Sale

  • Deal would continue yearlong trend of chip consolidation
  • Company may struggle to find buyer as sales have declined

Chipmaker PMC-Sierra Inc. has hired a financial adviser to seek a sale of the company, according to people familiar with the matter.

No deal is imminent and a transaction may not occur, said the people, who asked not to be identified because discussions are private. PMC, which is based in Santa Clara, California, is being pitched to other semiconductor companies, rather than private-equity firms, one of the people said.

PMC rose on the news, climbing 7.1 percent to $7.25 at the close Thursday in New York. It was the stock’s sharpest gain in almost two years.

PMC makes chips that control drives in network equipment, data-center storage systems and mobile-phone networks. The company reported sales declines in two of the past three years. The company’s high-margin products may be appealing to some strategic buyers, but their concentrated market could limit the number of available and willing purchasers, three of the people said.

PMC posted net losses in 2012 and 2013, although the company is likely to record a $14.5 million profit this year, according to analyst estimates compiled by Bloomberg. Revenue is expected to be about flat from last year, according to projections.

Kim Mason, a PMC-Sierra spokeswoman, declined to comment.

The stock has underperformed even the slumping chip industry as a whole, dropping 26 percent this year through Wednesday, about twice the decline of the benchmark Philadelphia Stock Market Semiconductor Index.

A deal would continue this year’s trend of semiconductor consolidation. There
have been 155 semiconductor takeovers announced since January, with pending,
completed and proposed deals totaling about $106 billion, according to data compiled by Bloomberg. That’s up more than six times from the same period last year.

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