Microchip To Buy Microsemi For About $8.35 Bln.

(RTTNews) - Chipmaker Microchip Technology Inc. (MCHP), Thursday said it agreed to buy Microsemi Corp. (MSCC) for about $8.35 billion

"We are delighted to welcome Microsemi to become part of the Microchip team and look forward to closing the transaction and working together to realize the benefits of a combined team pursuing a unified strategy," said Steve Sanghi, Chairman and CEO of Microchip.

Microchip will pay $68.78 for a Microsemi share in cash. The total enterprise value of Microsemi is about $10.15 billion, after accounting for Microsemi's cash and investments.

The transaction is expected to be immediately accretive to Microchip's adjusted earnings. Microchip anticipates achieving an estimated $300 million in synergies in the third year after close of transaction.

Microchip plans to finance the deal with about $1.6 billion of cash from the combined company balance sheets, about $3.0 billion from Microchip's existing line of credit, about $5.0 billion in new debt and $0.6 billion of a cash bridge loan.

Further, Microchip narrowed its outlook for the fourth quarter. The company now expects sales to be flat to down 2% with a mid-point of down 1% and adjusted earnings of $1.32 and $1.37 per share.

Analysts currently estimate earnings of $1.34 per share and revenue growth of 9.10%.

Previously, the company expected sales to be up 1% to down 3% with a mid-point of down 1% and adjusted earnings of between $1.30 and $1.39 per share.

The deal is latest one in the semiconductor industry, which continues to see a wave of mergers.

Broadcom Ltd. (AVGO) is currently in a hostile talks with semiconductor competitor Qualcomm Inc. to acquire the company for $117 billion, which would become the largest technology deal ever, if signed.

MCHP closed Thursday's trading at $89.02, up $0.09 or 0.10% on the Nasdaq.