Mircochip Progresses with SMSC's Merger - Analyst Blog
June 07 2012 - 4:45AM
Zacks
Recently, Microchip
Technology Incorporated (MCHP) announced that Microchip
and Standard Microsystems Corporation (SMSC) were
granted early termination of the waiting period on May 18, 2012,
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
The grant comes in connection with
the merger between the two companies. On May 2, 2012, Microchip
Technology signed a definitive agreement to acquire Standard
Microsystems Corporation for $37.00 per share in cash for about
$939 million. The net value comes to $766 million, excluding SMSC’s
cash and investments on its balance sheet of approximately $173
million.
Microchip also announced that the
required non-U.S. filings for pre-closing antitrust clearance
applicable to the merger have been submitted. The filings were
submitted in China, Korea, Germany and Turkey by the end of May and
early June.
Meanwhile, the completion of the
merger remains subject to antitrust clearance in these countries
along with approval by the stockholders of Standard Microsystems
(to be decided on July 10, 2012).
Nevertheless, Microchip expects to
close the acquisition by the third quarter of 2012. Microchip
expects this acquisition to be accretive to the bottom line in the
first quarter after its completion. Microchip believes that SMSC’s
smart mixed-signal connectivity solutions aimed at embedded
applications will perfectly complement Microchip’s embedded control
business. We view this acquisition a definite positive. Standard
Microsystems reported net sales of $412 million in fiscal 2012,
which ended in February. The acquisition is expected to broaden
Microchip’s existing product portfolio with the addition of SMSC’s
new products and capabilities in the automotive, industrial,
computing, consumer and wireless audio markets.
We currently have a ‘Neutral’
recommendation on Microchip. Our Neutral recommendation is
supported by a Zacks #3 Rank, which translates into a short-term
rating of ‘Hold’.
MICROCHIP TECH (MCHP): Free Stock Analysis Report
STANDARD MICROS (SMSC): Free Stock Analysis Report
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