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Microsemi offers $2.4bn to buy PMC-Sierra

Latest move highlights semiconductor industry consolidation wave

Microsemi offers $2.4bn to buy PMC-Sierra
Peterson says Microsemi has a strong track record of integrating acquisitions.

US-based chip maker Microsemi Corp has said it has offered to acquire semiconductor company PMC-Sierra, which manufactures semiconductors for telecommunications networks and data storage, for $2.4bn.

Microsemi's proposal for PMC-Sierra marks the latest in a string of consolidations and potential consolidations over the past year in the semiconductor industry. The offer comes weeks after US-based Skyworks Solutions posted a competing $2bn buyout proposal for PMC-Sierra.

The boards of both Skyworks and PMC-Sierra approved Skyworks' proposal earlier in October, and the deal was expected to close in the first half of 2016. However, Microsemi's proposal could trump that of Skyworks. If Microsemi is successful in its bid for PMC-Sierra, it could bolster Microsemi's chip business in the communications, aerospace, and industrial sectors.

"Microsemi has a strong track record of integrating acquisitions and driving profitability, and we will benefit from increased scale, industry-leading margins, diversified market exposure, consolidated infrastructure and substantial cost savings in a combination with PMC," Microsemi CEO and chairman James Peterson said in a statement.

Within the last year, slowing growth and rising costs drove larger deals in the chip industry. According to a report by Dealogic, chip companies have announced $100.6bn in mergers and acquisitions so far in 2015, already surpassing the $37.7bn in deals announced in 2014.

That includes several blowout acquisitions over the past few months among larger chip companies, including Intel's planned $16.7bn acquisition of Altera Corp, and Avago Technologies' $37bn buyout of Broadcom Corp.

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