PMC-Sierra board reverses, now backs Microsemi bid

The battle for control of communications semiconductor supplier PMC-Sierra, Inc. (NASDAQ: PMCS) has taken another turn. The company's board has reversed a previous decision to back the play of original bidder Skyworks Solutions, Inc. (NASDAQ: SWKS) and now says it favors of the most recent bid from Microsemi Corp. (NASDAQ: MSCC), according to Microsemi.

The about-face comes after the PMC board rejected Microsemi's bid, despite the fact that it was for more money ("PMC-Sierra board rejects Microsemi bid, backs Skyworks"). The PMC board said that the higher bid did not represent a "superior offer" under the terms of the acquisition agreement it had reached with Skyworks because it contained a stock component that added an unacceptable element of risk to the total value of Microsemi's bid. Microsemi declined to change its offer, but asserted that its stock value has maintained consistent strength. It also pointed out that it had more experience with integrating acquired companies than does Skyworks.

Apparently these arguments were sufficient to allay the PMC board's concerns. Microsemi says that the board has notified Skyworks that it now considers Microsemi's bid superior. Skyworks has three days to counter, Microsemi says.

Microsemi has offered $9.04 in cash and 0.0771x of a share of Microsemi common stock for each share of PMC common stock, a total transaction value of $2.3 billion. Skyworks has offered $2.27 billion in cash (see "Bids rise for PMC-Sierra"). The PMC board first announced an acquisition agreement with Skyworks October 6 (see "Skyworks agrees to acquire PMC-Sierra"). Microsemi responded to the news with an unsolicted bid for the company not quite two weeks later (see "Microsemi offers competing bid for PMC-Sierra").

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