Skyworks Solutions (NASDAQ:SWKS) and PMC-Sierra (NASDAQ:PMCS) has announced an agreement which involves the former acquiring the latter for about $10.50 for each share. The total value of the all-cash transaction is calculated to be about $2 billion. This move by Skyworks will expand its end market applications, portfolio and customer base.
Shareholders of PMC-Sierra, as per the share price, will receive a 37 percent premium windfall when calculated on the close of the stock on October 5. David Aldrich, the Chief Executive of the company, has mentioned of plans to leverage the innovations of network infrastructure solutions, storage systems and optical switches to expand its engagements with the leading ODMs and OEMs of the world. He also mentioned the emerging customer base of hyperscale data centers.
Skyworks expects this deal to quickly add to its earnings. The company manufactures chips used in the latest iPhones. PMC-Sierra is engaged in designing semi-conductor equipment. It also develops a number of software solutions for telecom carriers, cloud data centers and enterprises around the world. The deal will cement Skyworks's aspiration to be a diversified signal semiconductor leader.
According to Greg Lang, the CEO and president of PMC, the team at his company is excited to combine resources with Skyworks for realizing the vision of transforming bigger communication landscapes via unparalleled operational scale and product breadth. He mentioned the considerable global sales channels enjoyed by Skyworks and its leadership application support propped up by the international standard supply chain. Lang said that PMC could not have a better partner as it is in the planning to develop a broader range of cutting edge solutions to cater to customers.
Both the companies' Board of Directors has given their approval to the transaction. The closure of the transaction is estimated to end during the middle of 2016 calendar year. This, however, is subject to approval by PMC shareholders and the receipt of the appropriate regulatory approvals. There are also a number of a few extra customary closing conditions.
If one goes by preliminary results, Skyworks is expected to deliver revenues of about $880 million. Other fruits of this transaction include $1.52 of the non-GAAP diluted earnings for fiscal 2015's fourth quarter. The continued out-performance of the company is pushed by increasing adoption of new opportunities and integrated mobile systems across Internet of Things (IoT). Deal making in semi-conductors has touched nearly $80 billion until now, exceeding every year, except the millennium year.