Microchip Technology Inc. said it will acquire rival chip vendor Micrel Inc. in a cash and stock deal valued at $839 million.
Microchip (Chandler, Ariz.), which markets microcontrollers and analog/mixed-signal chips, will pay $14 for each outstanding share of Micrel, which makes analog and mixed-signal chips for the automotive and communications markets. The purchase price represents a 3% premium to Micrel’s closing price on May 6, the day before the deal was announced.
Including the roughly $95 million on Micrel’s balance sheet, the total deal value is roughly $744 million, Microchip said. Micrel shareholders may elect to receive the purchase price in either cash or shares of Microchip common stock.
Micrel announced in January it would review strategic alternatives for the company, contracting with Credit Suisse as its financial advisor.
Steve Sanghi, Microchip president and CEO, said through a statement that Micrel's portfolio of linear and power management ICs, LAN solutions and timing and communications products and strong position in the industrial, automotive and communications would complement Microchip’s initiatives in these areas and enable cross-selling opportunities.
Microchip also announced its board of directors authorized an increase in the company’s existing share repurchase program to 20 million shares of common stock from the roughly 2.5 million shares remaining under the prior authorization.
Micrel, founded in 1978, is among the Silicon Valley’s oldest semiconductor companies.