Macom in buy-and-sell deal with Applied Micro

November 22, 2016 // By Peter Clarke
Macom Technology Solutions Holdings Inc. (Lowell. Mass.), a vendor of radio, microwave and millimeter-wave ICs, has announced an agreement to acquire digital fabless chip company Applied Micro Circuits Corp. (Sunnyvale, Calif.) for $770 million.

AMCC designs and sells optical transport and storage ICs, network processors based on IBM's Power Architecture and ARM-based server processor and Macom has offered $770 million, or approximately $688 million net of AppliedMicro’s cash position of approximately $82 million. The offer is in a mix of cash and shares and Macom said it intended to sell AMCC's computing business within 100 days of closing the acquisition deal.

AMCC's trailing twelve-month revenue was $165 million with approximately $65 million contributing by the computing activity.

The remaining connectivity business with about $100 million of annual revenue is complementary to Macom's product portfolio, and brings Ethernet and PAM4 networking components, Macom said.

"AppliedMicro’s 100G to 400G single-lambda PAM4 platform should perfectly complement Macom's leadership in analog and photonic components for data centers," said John Croteau, CEO of Macom, in a statement. "Notably, the IEEE recently recommended the adoption of Applied Micro's single lambda PAM4 solution to be an industry standard for enterprise and Data Center connectivity, positioning this technology as the solution of choice going forward. Applied Micro also provides value-added technologies including SerDes, high speed analog-to-digital and digital-to-analog converters with industry-leading engineering competencies and long product lifecycles."

Applied Micro has already been exploring strategic options for its compute business and there are several potential buyers and investors, Macom said. Applied Micro is in the process of bringing its third-generation X-Gene server processor to market.

The boards of directors of both companies have approved the transaction, which is subject to customary closing conditions and regulatory approvals. MACOM currently expects the transaction to close in the first calendar quarter of 2017.

www.macom.com

www.apm.com