Communications semiconductor manufacturer Mindspeeed Technologies has entered into an agreement to be acquired by M/A-COM Technology Solutions in a deal valued at $272 million.
MACOM will acquire Mindspeed for $5.05 a share, nearly a 70% premium to its closing share price of $3.04 on November 4. This adds up to a transaction value of approximately $272 million in diluted equity value, or $246 million net of Mindspeed’s cash position of approximately $26 million.
MACOM supplies high-performance RF, microwave, and millimeter-wave products, including devices for optical communications applications. The company anticipates that the acquisition will strengthen its position in the optical communications market, especially as a provider of 100G optical products, and expand its addressable markets to include data centers and metro markets.
“This acquisition will position MACOM as a leading global provider of 100G optical solutions which underscores our growth strategy in commercial communications markets,” said John Croteau, MACOM’s president and CEO. “Our interest in Mindspeed is the company’s high-growth, high-margin HPA [high performance analog] business as well as its cash-generating VoIP business. The addition of the HPA portfolio, which consists of the world’s fastest crosspoint switches, ultra low power signal conditioners, and industry-leading optical PMDs, aligns well with MACOM’s business model – offering non-GAAP gross margins approaching 70%, long product life cycles, and sticky customer relationships.”
The deal does not include Mindspeed’s wireless business, which it is attempting to sell separately before the deal with MACOM closes. Mindspeed is currently in “advanced discussions” with a potential buyer, according to a statement. If the business is not sold, it will be restructured and wound down.
Mindspeed also has a communications processor business, but MACOM said it will look at additional options for that part of the business as it doesn’t align with the long-term strategic focus.
The deal is expected to close by the end of the year.
By Pauline Rigby
Press release: Mindspeed Announces Definitive Agreement to be Acquired by MACOM for $5.05 per Share
Press release: MACOM Announces Definitive Agreement to Acquire Mindspeed Technologies