PMC-Sierra: Microsemi acquisition bid may prove superior to Skyworks'

After thinking it over for a day, management at PMC-Sierra, Inc. (NASDAQ: PMCS) has acknowledged receipt of a bid to acquire the company from Microsemi Corp. (NASDAQ: MSCC). The PMC board says it still backs the previous acquisition offer it received and accepted from Skyworks Solutions, Inc. (NASDAQ: SWKS). However, the board says it has the fiduciary duty to talk with Microsemi because, in its words, "the Microsemi proposal would reasonably be expected to lead to a Superior Proposal."

Skyworks announced earlier this month that it had agreed to buy fellow semiconductor and software vendor PMC for $10.50 per share in an all-cash transaction worth approximately $2 billion (see "Skyworks agrees to acquire PMC-Sierra"). However, Microsemi yesterday announced an unsolicited cash and stock bid with a total transaction value of $2.4 billion for PMC (see "Microsemi offers competing bid for PMC-Sierra").

PMC management says it is evaluating Microsemi's offer and has not concluded that it qualifies as a "Superior Proposal" within the language of its deal with Skyworks.

"However, PMC's board of directors believes, after consultation with its financial advisors and outside legal counsel, that the Microsemi proposal would reasonably be expected to lead to a Superior Proposal, and that the failure to participate in discussions with Microsemi would reasonably be expected to be inconsistent with the board's fiduciary duties, so it has determined to engage in discussions with Microsemi," PMC said in a press statement.

Qatalyst Partners LP and Needham & Company, LLC are acting as financial advisors to PMC and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor.

The company gave no indication how long it expects to speak with Microsemi or when it would decide which bid to accept.

Skyworks has remained silent on the Microsemi bid so far.

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