GigOptix Proposes To Buy GSI Technology For $6.50 Per Share - Update

(RTTNews) - Semiconductor components supplier GigOptix, Inc. (GIG) Tuesday said it is proposing to acquire all of the outstanding shares of GSI Technology, Inc. (GSIT) for a consideration of $6.50 per share, or about $161 million in cash, stock and special dividend. GigOptix expects the combination to be immediately accretive on an Adjusted EBITDA basis.

GSI Technology shares jumped more than 13 percent in the morning trade, and GigOptix is up about 5 percent.

The consideration consists of $2.00 per share in cash, GigOptix common stock worth $1.33 based upon the volume-weighted average price of GigOptix's common stock for the three trading days ending one day prior to the closing of the combination, and a special dividend of $3.17 per share in cash payable by GSI Technology.

The combined value of $6.50 per share in aggregate represents about a 32 percent premium above the closing price of GSI Technology common stock on August 18, 2014.

According to GigOptix, the combination would have generated about $86 million in sales based on reported revenue results over the most recent trailing twelve months for each company and the transaction would be completed in the fourth quarter of calendar 2014.

Avi Katz, chairman and chief executive officer of GigOptix stated, "We believe our combination will deliver superior value to our respective shareholders, as it will strengthen the value proposition that we provide to our mutual customers becoming a major lead supplier of semiconductor devices for the new era of high-speed core, metro and cloud connectivity infrastructure markets."

GigOptix said it has received a commitment letter from Opus Bank to fully debt finance the cash portion of the consideration.

Crowell & Moring LLP is acting as legal counsel to GigOptix and Opus Bank is acting as financial advisors.

GIG is currently trading at $1.39, up 4.51 percent on the NYSE. GSIT trades up 13.36 percent at $5.60 on the Nasdaq.