- Along with its FQ4 results, Microchip (NASDAQ:MCHP) announces it's buying analog/mixed-signal chipmaker Micrel (MCRL) for $14/share, or $744M net of cash. Micrel shareholders can opt to be paid either in cash or stock.
- The price represents a modest 4% premium to Micrel's Thursday close. Microchip notes the price is 30% above where Micrel traded before activist Starboard Value disclosed a 12% stake last August, thus fueling hopes Micrel will take part in the chip industry's consolidation wave.
- The deal is expected to close in early calendar Q3. No word yet on expected post-merger cost synergies. Micrel's chips often go into hardware Microchip aims to sell microcontrollers for. Last year, Microchip bought Bluetooth chipmaker ISSC for $294M.
- Microchip has also announced it's expanding its buyback authorization to 20M from the 2.5M that it previously had remaining. The company's FQ4 diluted share count was 220.9M.
- FQ1 guidance is for revenue $547M-$564M and EPS of $0.69-$0.73, almost entirely below a consensus of $568.3M and $0.74. Many peers have also provided soft guidance.
- Microchip is nearly unchanged AH.