Microchip Technology Inc. (MCHP), a provider of microcontroller, analog and Flash-IP solutions, on Wednesday agreed to buy Standard Microsystems Corp. (SMSC) for $37 per share in cash as it aims to expand smart connectivity solutions for embedded markets. Standard shares climbed around 39 percent in pre-market activity on the Nasdaq.
The per share price represents a total equity value of about $939 million. The total enterprise value would be about $766 million, after excluding Standard's cash and investments on its balance sheet of approximately $173 million.
Microchip expects the acquisition to be accretive to its adjusted earnings in the first full quarter after completion of the acquisition.
The acquisition got the approval of the Boards of Directors of both companies and would close in the third quarter of calendar 2012. The deal is subject to Standard stockholders' approval, regulatory approvals and other customary closing conditions.
New York -based Standard is a developer of Smart Mixed-Signal Connectivity solutions. It is focused on delivering connectivity solutions that enable the proliferation of data in automobiles, consumer devices, PCs and other applications.
In its most recent fiscal year ended February 29, Standard reported net sales of $412 million, adjusted gross margin of 54.4 percent, and adjusted operating margin of 12 percent.
Commenting on the deal, Microchip's President and CEO Steve Sanghi said, "We believe SMSC's smart mixed-signal connectivity solutions aimed at embedded applications are an ideal complement to Microchip's embedded control business. This acquisition will expand Microchip's range of solutions..."
On April 19, Microchip bought Roving Networks, a privately held, fabless semiconductor developer of Wi-Fi certified transceivers and FCC certified Wi-Fi and Bluetooth modules. The acquisition expands Microchip's wireless offerings with additional embedded Wi-Fi Capabilities and new Bluetooth connectivity options for PIC microcontrollers.
Microchip shares closed Tuesday's trading at $35.23.
In pre-market activity, Standard Microsystems shares climbed $10.09 or 38.45 percent and currently trading at $36.33.
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