Chipmaker Microsemi Runs Sales Process After Skyworks Approach

  • Chipmaker said to hire Bank of Montreal to help advise company
  • Skyworks lost to Microsemi in bidding war for PMC-Sierra

Microsemi: a Possible Acquisition Target?

Chipmaker Microsemi Corp. is running a sale process after receiving takeover interest from Skyworks Solutions Inc., according to people familiar with the matter.

Microsemi hired Bank of Montreal to run a broader auction after Woburn, Massachusetts-based Skyworks offered to buy the company, the people said, asking not to be named because the negotiations are private. The process is in the early stages, no deal is imminent and a transaction may not occur, said the people.

Another financial adviser is working alongside Bank of Montreal on the potential sale, one of the people said.

Microsemi shares climbed as much as 20 percent Thursday and traded at $46.71 at 10:04 a.m. in New York. That gives the Aliso Viejo, California-based company a market value of about $5.3 billion.

Representatives for Microsemi, Skyworks and Bank of Montreal didn’t respond to requests for comment.

Microsemi makes chips for defense, communications and aerospace use, concentrating on parts that are hardened for extreme environments such as space. While there are few surges in demand for such products, they command higher prices and profit margins than chips used in consumer electronics devices. Orders also usually come with multi-year supply agreements.

Adding Microsemi would help Skyworks diversify its earnings away from its total dependence on the slowing market for phones. Microsemi gets more than a quarter of its revenue from defense and security customers and another 21 percent from industrial clients, according to data compiled by Bloomberg.

If a deal is reached then Skyworks, which has a market valuation of more than $14 billion, would finally get its hands on PMC-Sierra Inc. Skyworks lost a bidding war to Microsemi over PMC-Sierra last year. The unit, which was sold for about $2.5 billion, is now known as Microsemi Storage Solutions.

StreetInsider reported on Oct. 21 that Microsemi was trying to sell itself.

(An earlier version of this story corrected the timing of the report in the final paragraph)

(Updates shares in fourth paragraph.)
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