U.S. chipmaker Microsemi (NASDAQ: MSCC) has agreed to buy PMC-Sierra (Nasdaq:PMCS) in a deal worth US$2.5 billion.
The November 24 agreement comes a day after Skyworks Solutions Inc. (Nasdaq:SWKS) announced it was ending its own US$2-billion takeover bid for fellow chipmaker PMC-Sierra.
The October deal between Skyworks and PMC-Sierra was not expected to close until the first half of 2016 and required shareholder approval.
In the meantime, a U.S. law firm specializing in class action lawsuits launched an investigation into the original takeover bid.
Lawyer Vincent Wong said the lawsuit concerned whether the PMC-Sierra board had “adequately shopped” the company before agreeing to the takeover.
But the new deal with Microsemi ups the original bid by US$500 million.
“Skyworks maintains a highly disciplined approach to the assessment of potential acquisition candidates, and at an increased valuation, PMC no longer meets Skyworks' financial criteria,” the company said in a November 23 statement.
Skyworks will be paid out a US$88.5-million termination fee for ending its bid.
PMC-Sierra is headquartered in California but its operations office is in Burnaby.
Microsemi said it anticipates the merger would save the company US$100 million annually, with $US75 million of those savings coming in the first full quarter of combined operations.
