Microchip Technology Disappoints on 1Q16 Earnings
Shareholders to receive $42.88 per share
On August 3, 2015, Microchip (MCHP) announced its acquisition of Micrel Inc. (MCRL), where 98.95% of Micrel shareholders approved the merger and voted in its favor.
“We are very pleased to have completed our acquisition of Micrel,” said Steve Sanghi, Microchip president and CEO. “I welcome the Micrel employees into the Microchip family and look forward to building a combined organization that will bring the capabilities of both organizations to bear in the marketplace.”
According to the acquisition details, Micrel shareholders were able to elect to receive the $14 per share purchase price in cash or shares of MCHP common stock. Microchip is expected to pay approximately $430 million in cash and issue 8,626,795 shares to Micrel shareholders. According to Microchip’s August 3, 2015, press release, “The number of shares of Microchip common stock that a Micrel shareholder will receive is based on a conversion ratio of $14.00 divided by the average of the Microchip closing stock price for the ten most recent trading days ending on the second to last trading day prior to August 3, 2015, which is $42.888 per share.”
Focus on analog business
Microchip is already a leading player in the 16-bit and 32-bit microcontroller segment, where the firm has gained significant market share. Microchip expects to build momentum and ensure it remains one of the major players in this space. Microchip is looking to expand its touch business not only to handsets and tablets but also in the automotive industrial application segment.
The top players in the analog business segment are Texas Instruments (TXN) and Analog Devices (ADI). Microchip’s analog business is a fast-growing segment where the firm is looking to introduce a wide range of innovative and proprietary products.
Microchip comprises 0.05% of the iShares Core S&P 500 ETF (IVV) and 0.25% of the Technology Select Sector SPDR ETF (XLK), respectively.
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