Actel Acquisition Should Strengthen Microsemi's Product Line

 |  Includes: ACTL, MSCC
by: Proactive Investor

Semiconducter company Microsemi (Nasdaq:MSCC) said Monday that it has agreed to acquire Actel (Nasdaq:ACTL) in a deal valued at approximately $430 million.

Headquartered in Mountain View, California, Actel supplies low-power, mixed-signal, and radiation-tolerant field programmable gate arrays (FPGAs) serving the aeropsace and defense, industrial, communication, and consumer markets. The company is known in the satellite and space markets as a result of its knowledge of radiation tolerance and space-level qualifications.

The $20.88 per share cash offer, which has already received financing from Morgan Stanley, represents a 30% premium to Actel's closing price of $16.02 on Friday October 1, 2010.

The deal is expected to expand Microsemi's system-level and programmable capabilities, strengthen its mixed-signal product offering and create significant synergies, said the company.

Microsemi expects the acquisition to be $0.22 to $0.28 accretive in its first full calendar year ending December 2011.

For the September quarter, net sales for Microsemi are expected to range from $146 to $150 million. Currently, the company has reaffirmed its adjusted diluted earnings per share guidance for its fourth fiscal quarter of 2010 of $0.33 to $0.35.

The transaction, which is expected to close in Microsemi's first fiscal quarter next year, is still subject to customary closing conditions, including Actel's shareholder approval. Both boards have already approved the deal.

Microsemi, with corporate headquarters in Irvine, California, is a designer, manufacturer and marketer of analog and mixed-signal integrated circuits, semiconductors and RF subsystems. The company's semiconductors manage and control or regulate power, protect against transient voltage spikes and transmit, receive and amplify signals.

The principal markets the company serves include implanted medical, defense/aerospace and satellite, notebook computers, monitors and LCD TVs, automotive and mobile connectivity applications.

The company was up 10% on Monday, trading at $18.8 as of 11:09am ET on the Nasdaq, while Actel rose more than 30% to trade at $20.94.

Disclosure: No positions