Microchip Technology Incorporated and SMSC announced the acquisition of SMSC by Microchip on Wednesday, May 2, 2012. The conference call associated with this release will take place on Wednesday, May 2, 2012 at 9:30 a.m. (Eastern Time). The call will be simulcast on the internet at www.microchip.com. An internet replay of this call will be available for a period of 7 days following the call at www.microchip.com.
A telephonic replay of this call will also be available from May 2, 2012 at approximately 12:00 p.m. (Eastern Time) until May 10, 2012 at 8:00 p.m. (Eastern Time). To access this replay, please dial 719-457-0820 and enter access code 2069664.
Thinking out loud about pros and cons of this buy.
SMSC is about 20% of MCHP in revenues, but about 2x higher in revenues per employee. Buyout price is about 2x sales. SMSC has about $150M cash and lower profit margins than MCHP. All good.
Can MCHP do the buyout with offshore cash? That sort of move is driving a lot of acquisitions since the USA is not getting friendlier towards companies bringing offshore money back here. Again, hard to argue with using offshore cash this way.
Patents. Recent patent-only deals seem to value at about $1M~$2M per. This is a "no-brainer" point.