The Sipex Corp. (SIPX) - Exar Corp. (NASDAQ:EXAR) merger looks to be a very straightforward combination in terms of competition issues, as it lacks the niche IC overlap required for the FTC to show any interest. The history of Semiconductor IC deals indicates very little FTC interest even when overlaps exist, and it usually takes a variety of complex overlaps and/or very clear market dominance in a niche to create any sort of HSR delay. This deal lacks both of these factors.
The companies list the following as their primary competitors:
AATI, Analog Devices, Intersil, Linear Technology, Maxim Integrated Products, Micrel Semiconductor, National Semiconductor, On Semiconductor, Pioneer, Semtech, Sharp, Sony and Texas Instruments.
Agere Systems, Applied Micro Circuits Corporation, Infineon Technologies North America Corp., Integrated Device Technology, Inc., Mindspeed Technologies, Inc., PMC Sierra, Inc., TranSwitch Corporation and Vitesse Semiconductor Corporation. Competitors in the clock products area include Cypress Semiconductor and Integrated Device Technology, Inc. Competitors in the Company’s serial communications and video and imaging markets include Royal Philips Electronics, Texas Instruments Incorporated and Wolfson Microelectronics LTD.
The fact that neither company mentions the other is almost as telling as the volume and magnitude of the competitors listed. These two companies are second-tier players, if that. One source ranks SIPX as the #170 IC foundry, while EXAR is ranked in the 180's.
In short, this deal will receive HSR clearance in 30 days or less without doubt.
These deals rarely encounter major delays with the SEC. This deal should be no different. Both companies have been required to amend their annual reports within the last calendar year. This recent familiarity with the regulator will in all likelihood translate into a proxy review of no more then 60 days in a worst-case scenario. SEC clearance via review waiver or in less than 45 days is the more probable outcome.
Although the historical data shows a four-month average for similar deals, this one is more likely to close in 90 days or less, barring an SEC review that exceeds 60 days.
The current closing projection is late-July / early-August 2007.
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