Microchip to acquire Micrel

May 11, 2015 // By Susan Rambo
Microcontroller and analog semiconductor company Microchip Technology Incorporated (Chandler, Ariz) announced that it has signed a definitive agreement to acquire the analog semiconductor company Micrel (San Jose, Calif.) for USD14.00 per share, equaling an acquisition price of USD839 million.

"Micrel's portfolio of linear and power management products, LAN solutions and timing and communications products, as well as their strong position in the industrial, automotive and communications markets, complement many of Microchip's initiatives in these areas," said Steve Sanghi, president and CEO of Microchip Technology, in a statement.

"We are pleased to have Micrel become part of the Microchip team," said Micrel’s cofounder and CEO Raymond Zinn. Zinn has run the company since its founding in 1978.

Micrel has had its own share of acquisitions, including PhaseLink (crystal oscillator chips) in 2012 and Discera, for silicon timing solutions, in 2013. Micrel has 678 employees and ranks 30th in semiconductor sales, according to San Jose Mercury News . The company was reportedly under pressure from shareholder hedge fund Starboard Value LP, which owns a 12% interest in Micrel.

The latest in a slew of semiconductor company consolidations, the deal will likely close in 3rd quarter this year. Microchip’s Sanghi, who famouly expressed doubt in the market’s health in October 2014 , had an 11.9% increase in net sales in 2015 year over year.

Microchip announced the deal in its earnings call on May 7, during which the company reported net sales in 2015 at $2.161 billion. Gross margins were 58.8% in 2015, operating expenses were 26.4% of sales and operating income was 32.4% of sales. Net income was a record $593.9 million or $2.66 per diluted share.

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