Peregine Semiconductor (PSMI) Shares Soar on Buyout Offer - Analyst Blog


Peregrine Semiconductor Corp. ( PSMI ), a provider of various radio frequency integrated circuits, recently entered into a definitive agreement with Japanese electronic components maker, Murata Manufacturing Co. to divest itself. Per the deal, Murata will acquire Peregrine Semiconductor for $12.50 a share or a total value of $471 million, including the former's stake in Peregrine.

The offer price of $12.50 per share is at a 62.5% premium over Thursday's closing share price of $7.69. According to the company's filings, Murata already owns 1.56% of Peregrine. Excluding its existing share, Murata will pay about $465 million for the buyout.

It is worth noting that following the announcement, shares of Peregrine soared nearly 63% to $12.53, the biggest increase since it went public in Aug 2012.

The deal which has been approved by the boards of both the companies awaits the approval of Peregrine shareholders. The deal is most likely to close late this year or early the next.

Upon deal closure, Peregrine will become a wholly owned subsidiary of Murata and continue with its current business operations.

U.S.-based Peregrine Semiconductor provides technology that allows radio frequency (RF) and other digital functions on a single computer chip. Its silicon on insulator (SOI) technology which uses layers of silicon as insulation helps to improve the performance of chips used in smartphones and other wireless devices.

The deal will give Murata access to Peregrine's intellectual property (IP) rights on RF SOI technology which will boost its RF business as well as the wireless business, including mobile devices and radio equipment. The acquisition will also help Murata expand into important international markets.

For Peregrine shareholders, this is an attractive return on investment. It is worth mentioning that the pace of mergers and acquisitions in the semiconductor industry has picked up of late. Last week, Infineon Technologies AG ( IFNNY ) agreed to acquire International Rectifier Corp., a manufacturer of power management semiconductors, for $3 billion in an all-cash deal. Some of the other deals include Intel Corp.'s ( INTC ) announcement to acquire the Axxia chip business from Avago Technologies Ltd. ( AVGO ) for $650 million and Applied Materials, Inc.'s agreement to acquire Tokyo Electron Ltd.

Murata manufactures ceramic passive electronic components, primarily capacitors. The company's products are used in electronic items like TVs, gaming consoles and power supplies among others, to control the flow of electricity.

Currently, Peregrine has a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: RF , IP , INTC , IFNNY , AVGO

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