Peregrine Semiconductor Corp.
), 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
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
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 (
) 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 (
) announcement to acquire the Axxia chip business from Avago
Technologies Ltd. (
) 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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