6 October 2015

Skyworks to acquire PMC-Sierra for $2bn

Skyworks Solutions Inc of Woburn, MA, USA has agreed to acquire PMC-Sierra Inc of Sunnyvale, CA, USA (which provides semiconductor and software solutions for storage, optical and mobile networks) for $10.50 per share in an all-cash transaction valued at about $2bn.

Skyworks says that the acquisition solidifies its position as a highly diversified analog, RF and mixed-signal semiconductor firm by significantly expanding its product portfolio, customer base and end-market applications. Upon completion of the acquisition, Skyworks expects annual revenue to be more than $4bn with gross margin in the 55% range and operating margin exceeding 40%.

"Skyworks will be uniquely positioned to capitalize on the explosive demand for high-performance solutions that seamlessly connect, transport and store Big Data," says Skyworks' chairman & CEO David J. Aldrich. "Specifically, we plan to leverage PMC's innovative storage systems, flash controllers, optical switches and network infrastructure solutions to expand our engagements with some of the world's leading OEMs and ODMs as well as emerging hyperscale data-center customers. At a higher level, this complementary yet highly synergistic acquisition is consistent with our stated strategy of diversifying into adjacent vertical markets while leveraging our system-level expertise and global scale. PMC enables us to substantially expand our serviceable market within some of the fastest-growing segments in technology including cloud storage and optical networking," he adds. "Financially, we expect this transaction to create further economic value for our shareholders upon closing, with immediate margin expansion and accretion. After we implement $75m of synergies, we expect at least $0.75 of incremental non-GAAP diluted earnings per share on an annual basis," Aldrich continues.   

"Given Skyworks' deep global sales channels and leadership applications support, underpinned by a world-class supply chain, we could not have found a better partner," comments PMC's president & CEO Greg Lang. "Together, we plan to develop a wider range of leading-edge solutions for our customers, target new growth vectors and enable some of the most exciting networking and storage platforms in the world." 

For each share of PMC common stock held at closing, PMC's stockholders will receive $10.50 in cash (a 37% premium to the close of PMC's stock as of 5 October).

Skyworks intends to fund the acquisition with cash on hand from the combined companies and with new, fully committed debt financing. The closing of the transaction is not subject to financing conditions.

The boards of directors of each firm have approved the transaction, which is expected to close in first-half 2016, subject to PMC shareholder approval, receipt of regulatory approvals and other customary closing conditions.

Excluding any non-recurring acquisition-related charges and amortization of acquired intangibles, Skyworks expects the acquisition to be immediately accretive to non-GAAP earnings post-closing and will finalize estimates of the transaction's financial impact as well as the accounting for the transaction upon deal close.

Based on preliminary results, for fiscal fourth-quarter 2015 Skyworks expects to deliver about $880m in revenue and $1.52 of non-GAAP diluted earnings per share. "Skyworks' sustained outperformance is being driven by the growing adoption of our integrated mobile systems and new opportunities across the Internet of Things," states executive VP & chief financial officer Donald W. Palette.

See related items:

Skyworks' quarterly revenue rises a more-than-expected 38% year-on-year to $810m

Tags: Skyworks

Visit: www.skyworksinc.com

Visit: www.pmcs.com