Chatter is picking up again that Microsemi Corp. is exploring options, including a possible sale.
The Aliso Viejo-based chipmaker hired investment bank Qatalyst Partners to do the work, according to recent reports by Reuters and Dealreporter.
“We do not comment on speculation,” a Microsemi spokesperson told the Business Journal.
Deutsche Bank said in a Jan. 24 investor note that the company could draw a sale price in the mid-$70-per-share range, which is about an 18% premium on its share price at the close of the Jan. 24 trading session.
The investment bank said any sale could be challenging, given the chipmaker’s legacy in the aerospace and defense sectors.
“When thinking about potential buyers, the only limitation we would see is the company’s large aerospace and defense exposure (roughly [about] 26% of sales), which likely limits the potential universe of acquirers to US-based companies,” it said in the investor note.
Microsemi, led by Chief Executive Jim Peterson, posted record sales of $1.8 billion in the 12 months through September, up 9.5% from a year earlier. Net income hit $176.3 million—another record.
Similar chatter surfaced in November 2016 after Skyworks Solutions Inc. expressed interest in buying the company, according to news reports at the time.
Skyworks is run from Irvine and has its headquarters designation as Woburn, Mass.
An investor note by RBC Capital Markets at the time listed several potential suitors, including “Skyworks, Texas Instruments, Maxim and even Broadcom, if it divests overlapping segments,” the report stated. “We think the asset could be attractive to a myriad of acquirers but believe it may be a bit early for a sale.”
Those developments led the Business Journal to select Microsemi as a company to watch last year as a potential takeover target, given its ongoing diversification efforts in the communication, Internet of Things and data center segments, which augment its legacy positions in the military, industrial and aerospace sectors.
The pick may have been a year too early, as the chipmaker continued its roll-up strategy, acquiring two companies last year.
Its chips are built into satellites, drones, digital televisions, defibrillators, pacemakers and other devices made by the likes of Boeing, Hewlett-Packard, Dell Inc. and Samsung Electronics.
Microsemi shares are up about 13% in the past 52 weeks to a market cap of $7.4 billion, just shy of its all-time high.
It was the third-largest chipmaker in Orange County last year, with 231 local employees.
Toshiba Unit Update
The ongoing saga of Toshiba Corp.’s pending $18 billion sale of its flash memory unit took another turn, with news surfacing that the Japanese conglomerate could spin off the lucrative business in an initial public offering if the deal collapses.
An IPO is one of the options on the table, according to a report by The Financial Times, if the deal doesn’t get regulatory approvals by March 31—a rather tight deadline considering it must gain nods from overseas regulators with their own sets of distinct, regional concerns.
The potential of an IPO is bad news for Kingston Technology Inc., which joined a group led by Boston-based Bain Capital in the winning bid. The consortium that secured Toshiba’s coveted flash-memory business included Apple Inc. in Cupertino, South Korean chipmaker SK Hynix Inc., Dell in Round Rock, Texas, and Western Digital Corp. rival Seagate Technology PLC.
NAND flash is a key memory component and the most popular rewritable memory chip used in USB drives, cameras, iPods, smartphones, tablets and other devices.
May They Help?
The industry push in digital helpers, such as Amazon’s Alexa and Google Assistant, and voice-activated devices, was on full display last month at the CES trade show in Las Vegas.
And with good reason, as more than five billion consumer devices will support the emerging technology this year, according to a new report by London-based IHS Markit.
Another three billion devices will be added next year.
Several OC companies have introduced and showcased new voice-activated products and services in the past few months, including Irvine-based Conexant Systems LLC, D-Link Systems Inc. in Fountain Valley, Santa Ana-based remote control maker Universal Electronics Inc. and Irvine-based smart-technology products maker Insteon.
