Shares of Irvine’s Microsemi Corp. rose Tuesday after the company bought local rival chipmaker Costa Mesa-based Semicoa Semiconductors for $25 million in cash.
The stock was up 2% on a recent market value of about $2 billion.
Last year privately held Semicoa invested more than $4 million to expand and update its 12,000-square-foot chip plant in Costa Mesa to meet increased demand from aerospace and defense contractors.
Microsemi bought Semicoa primarily for the new equipment and because there was a lot of overlap in their product lines, Chief Executive Jim Peterson said in a conference call.
The company said it plans to consolidate some of Semicoa’s plants and operations into Microsemi facilities in Lawrence, Mass., and in Ireland in order to boost its output.
Roughly 40 jobs were cut at Semicoa’s Costa Mesa plant this week. Post-acquisition, Microsemi will have two years left on the lease of the Semicoa plant, Peterson said.
He said the bulk of the equipment is set to be moved to Ireland within a year. Another round of job cuts in Costa Mesa is set to follow in October, Peterson said.
The company expects the deal to add to earnings right away, Peterson said.
“We expect the deal to pay for itself in about 24 month’s time,” he said.
Both Microsemi and Semicoa’s chips go into satellites, munitions, planes and tanks, among other military gear.
Microsemi has a plant in Garden Grove. Both companies are among just a few that actually make chips here.
Other semiconductor companies, including Irvine’s Broadcom Corp., design and test chips but manufacture them in Asia.
This is Microsemi’s second buy this year.
In January, the company said it was paying $2 million for Danvers, Mass.-based TSI Microelectronics Corp., a maker of electronics for military and defense contractors.
