Microsemi fires again, ups offer for PMC-Sierra - Updated

Refusing to take no for an answer, Microsemi Corp. (NASDAQ: MSCC) has raised its bid to acquire PMC-Sierra, Inc. (NASDAQ: PMCS) to $9.22 in cash and 0.0771x of a share of Microsemi common stock for each share of PMC common stock, or a combined $12.05 per share based on the closing stock price of Microsemi stock on November 17, 2015. The increase in the cash portion of the offer restores the implied enterprise value of Microsemi's proposal to $2.3 billion, after a dip in its share price made the previous bid less valuable.

UPDATE: Microsemi announced early November 19 that the PMC board had deemed the new offer superior to the most recent bid from Skyworks Solutions, Inc. (NASDAQ: SWKS). Skyworks has three business days to top Microsemi's latest play.

The increased bid put PMC's board in a tough spot. The board clearly appears to want to work with Skyworks, with whom they have already reached a sale agreement (see "Skyworks agrees to acquire PMC-Sierra"). However, Microsemi has made repeated unsolicited offers that it deems superior to those of Skyworks.

After appearing to accept Microsemi's previous bid, the PMC board recently changed its mind on the grounds that the stock component makes the value less certain than Skyworks' all-cash offer, even if the current implied enterprise value of Microsemi's suit is greater (see "PMC-Sierra board flip flops again, now backs Skyworks bid"). It pointed to "recent stock market volatility exacerbated by recent geopolitical events" as its rationale.

"The board of PMC chose not to recommend to their shareholders our previous proposal, which was $0.17 per share higher than the existing offer from Skyworks," said James J. Peterson, Microsemi's chairman and CEO, after the company announced its newly increased offer. "Our revised offer delivers even more value to shareholders and we have addressed PMC's preference in increasing the cash component of our proposal. Because we are not subject to the same uncertainty regarding regulatory approvals, our unique ability to close this transaction represents the best approach to realizing the value of PMC in a timely manner, consistent with the board's fiduciary responsibility to its shareholders."

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