Skyworks Solutions has announced a definitive agreement under which they will acquire PMC-Sierra for $10.50 per share in an all-cash transaction valued at approximately $2 billion. This acquisition will solidify Skyworks position as a highly diversified analog, RF and mixed signal semiconductor leader by significantly expanding its product portfolio, customer base and end market applications. Upon completion of the acquisition, Skyworks expects annual revenues of more than $4 billion with gross margin in the 55 percent range and operating margin exceeding 40 percent.
With the acquisition of PMC, Skyworks will be well positioned to capitalize on the explosive demand for high performance solutions that seamlessly connect, transport and store Big Data. They plan to leverage PMC's innovative storage systems, flash controllers, optical switches and network infrastructure solutions to expand their engagements with some of the world's leading OEMs and ODMs as well as emerging hyperscale data center customers. This is a complementary yet highly synergistic acquisition that is consistent with their strategy of diversifying into adjacent vertical markets while leveraging their global scale. PMC enables them to expand their serviceable market within some of the fastest growing segments in technology including cloud storage and optical networking.
Under the terms of the agreement, PMC's stockholders will receive $10.50 in cash for each share of PMC common stock held at closing. This price represents a 37 percent premium to the close of PMC's stock as of October 5, 2015. Skyworks intends to fund the acquisition with cash on hand from the combined companies and with new, fully-committed debt financing. The closing of the transaction is not subject to financing conditions. The Boards of Directors of each company have approved the transaction, which is expected to close in the first half of calendar 2016, subject to PMC shareholder approval, receipt of regulatory approvals and other customary closing conditions.
