PMC-Sierra board rejects Microsemi bid, backs Skyworks

The board of directors at PMC-Sierra, Inc. (NASDAQ: PMCS) has rejected Microsemi Corp.'s (NASDAQ: MSCC) latest attempt to lure the company away from Skyworks Solutions, Inc. (NASDAQ: SWKS). The chip-makers board has determined the latest Microsemi bid is not a superior offer as defined in its agreement with Skyworks (see "Skyworks agrees to acquire PMC-Sierra"), despite the fact that Microsemi's offer is more lucrative.

The decision, announced Sunday, November 1, follows a second bid from Skyworks, and a counterproposal from Microsemi (see "Bids rise for PMC-Sierra"). The second Skyworks bid is worth $2.27 billion, slightly more than Microsemi's original, unsolicited bid of $2.25 billion (see "Microsemi offers competing bid for PMC-Sierra" and "PMC-Sierra: Microsemi acquisition bid may prove superior to Skyworks'"). Microsemi quickly countered with a bid worth $2.3 billion.

However, despite the bump in value, PMC's board believes the Skyworks bid is superior for a variety of reasons, mostly pertaining to the fact that while the Microsemi bid is a mix of stock and cash, the Skyworks is all cash. The Skyworks proposal therefore provides more value certainty, thanks to the volatility of the stock market and the fact that Microsemi is currently trading near its five-year high. In addition, the debt incurred to acquire PMC would make Microsemi one of the most highly leveraged public semiconductor companies, the PMC board asserted.

The board further states that it has delivered this opinion to Microsemi and asked for a best and final offer. Microsemi has failed to do so, the board states.

PMC's board of directors therefore continues to recommend the amended and restated merger agreement with Skyworks to its stockholders.

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