Aliso Viejo-based chipmaker Microsemi Corp. has placed a $2.4 billion bid to acquire chipmaker PMC-Sierra Inc., the company said this morning.
The bid, which represents a 50% premium based on the closing price of PMC’s shares on Oct. 5, trumps a $2 billion bid for the Sunnyvale company made earlier this month by Woburn. Mass.-based Apple supplier Skyworks Solutions Inc.
Microsemi projects the transaction would lead to $100 million in annual cost savings and a profit boost of $57.2 million in the first 12 months after the deal would close.
The proposal, sent in a letter to PMC’s board today, is subject to U.S. regulatory approvals and includes a provision of an “exchange offer” in a bid to close the deal by the end of the year.
Microsemi intends to fund the transaction and repay its existing debt with cash, $2.7 billion in new transaction debt and $600 million in Microsemi common stock.
Microsemi shareholders would own about 85% of the combined company, while PMC shareholders would own about 15%.
Microsemi shares are down 6.6% in afternoon trading to a market value of about $3.3 billion. PMC shares are up nearly 13% to a market value of about $2.2 billion.