Semiconductor company Micrel Inc., which said in January it would explore alternatives, has signed a deal to be sold to Microchip Technology Inc. in a cash-and-stock deal with an equity value of about $839 million.
The $14-a-share deal has an enterprise value of about $744 million, after excluding Micrel’s cash and investments on its balance sheet.
The transaction provides a 3% premium to Micrel’s Thursday closing price of $13.50, but the companies noted that the deal offers a 30% premium to the price on Aug. 7, when activist investor Starboard Value LP disclosed a 12% stake in Micrel.
Microchip Technology said the deal “will enable significant synergies and cross selling opportunities.” The company said Micrel products in areas like linear and power management, local area networks, timing and communications and automotive “complement many of Microchip’s initiatives in these areas”
The deal is expected to close early in the third quarter.
Microchip will increase its stock-buyback authorization, planning to repurchase the approximate number of shares it will issue in the acquisition.
The transaction is expected to slightly reduce per-share earnings excluding items immediately after closing, but is projected to increase earnings per share in the first full quarter after the company buys back the number of shares issued in the transaction.