(By Balaseshan) Semiconductor products maker Microchip Technology Inc. (NASDAQ:MCHP) agreed to buy Standard Microsystems Corp. (NASDAQ:SMSC) for $37.00 per share in cash. Following the news, shares of SMSC rose 38.7% in premarket.
The deal represents a 41 percent premium to SMSC's closing price of $26.24 on Tuesday.
The $37.00 per share cash represents a total equity value of about $939 million, and a total enterprise value of about $766 million, after excluding SMSC's cash and investments on its balance sheet of about $173 million.
Microchip expects the transaction to be accretive in the first full quarter on an adjusted basis after the completion of the transaction.
After the completion of deal, Microchip will add SMSC's smart mixed-signal connectivity solutions as well as over 300 granted patents and about 100 pending patents of SMSC to its exisiting portfolio. The deal would be funded by Microchip through a combination of its cash as well as its line of credit established last year.
The acquisition has been approved by the Boards of Directors of each company and is expected to close in the third quarter of calendar 2012.
SMSC would become a subsidiary of Microchip and each share of SMSC common stock issued and outstanding immediately prior to the effective time of the merger, will be converted into the right to receive a cash amount of $37.00, without interest and less any applicable withholding taxes.
In connection with deal, each of the directors and certain officers of SMSC, in their respective capacities as stockholders of SMSC, have entered into voting agreements pursuant to which they have agreed to, among other things, vote their shares of SMSC common stock in favor of adopting the merger agreement.
MCHP closed Tuesday's regular session down 0.40% at $35.23, while SMSC ended down 0.91% at $26.24.