Microchip Technology Inc (NASDAQ:MCHP) has agreed to buy Microsemi Corp. (NASDAQ:MSCC) for US$8.3bn, a deal that would create a growing power in chips for everything from washing machines and cars to missiles.
Microchip will pay US$68.78 a share in cash for Microsemi to form a company with annual revenue of about US$6bn and that should generate some $300mln in synergies within three years.
Opportunity to cross sell chips
The two companies have complementary strengths, focusing to a large extent on different areas - Microsemi makes chips for communications and for aerospace and defense applications; Microchip specialises in semiconductors for the industrial, auto and home-appliance markets.
Microchip chairman and chief executive Steve Sanghi reportedly said the deal represents “an opportunity to cross sell our chips into end markets where they’re strong and vice versa.”
In pre-market New York trading on Friday, Microsemi shares were 5% higher at US$67.50, while Microchip Technology shares were up 2.9% at US$91.44.