Skyworks Solutions agreed to buy PMC-Sierra Inc. for $2 billion in cash Monday, marking the second multibillion-dollar chip deal announced in the past month.
PMC shareholders will get $10.50 a share, a 37 percent premium to Monday's close of $7.69 on the Nasdaq. The deal will add 75 cents a share to Skyworks' earnings on an annual non-GAAP basis, it said in a statement.
Skyworks shares fell 3.1 percent in midday trading Tuesday. PMC Sierra soared 33 percent to $10.26.
Skyworks, a Woburn, Massachusetts-based maker of chips used in communications, aircraft and security systems, joins Dialog Semiconductor, Intel and Avago Technologies in buying industry colleagues. A total of 39 deals valued at $83.5 billion have been announced in the past year as the semiconductor business consolidates amid higher costs and stiffer competition, according to data compiled by Bloomberg.
PMC, which is based in Santa Clara, California, makes chips that control drives in network equipment, data-center storage systems and mobile-phone networks. The company reported sales declines in two of the past three years.
Skyworks' communications chips are rivals to similar products made by Qorvo, which has corporate offices in Oregon and North Carolina. Qorvo shares fell 1.4 percent in midday trading Tuesday; the stock has lost nearly half its value this year amid declining expectations for wireless growth in China and technological competition from Skyworks and another rival, Avago.
Buying PMC will provide $75 million in combined annual savings in the first 12 months, according to Skyworks, which also said fourth-quarter results will be "better than guidance." Skyworks shares rose 13 percent this year through Monday, compared with a 9.8 percent decline in the Philadelphia Stock Market Semiconductor Index.
Chip Deals
Revenue for its fiscal fourth quarter will be about $880 million with non-GAAP diluted EPS of $1.52, it said. Analysts expected sales of $876 million with adjusted EPS of $1.51, according to data compiled by Bloomberg. The company's guidance was $875 million and $1.51, respectively.
The deal is the fifth-largest semiconductor acquisition to be announced in the past year, behind Avago's $29.8 billion cash and stock bid for Broadcom Corp. Half the deals tracked by Bloomberg paid a premium of 10 percent to 25 percent.
The PMC acquisition will be financed with cash on hand from both companies as well as new, fully committed debt financing, it said. Skyworks had $1.1 billion in cash and equivalents as of July 3, while PMC had $110 million on June 27, according to data compiled by Bloomberg.
-- Bloomberg News