Recently,
Standard Microsystems Corporation
(
SMSC
) held a special meeting of stockholders, whereby the stockholders
of the company approved the merger with
Microchip Technology Incorporated
(
MCHP
), announced in May.
Last month, Microchip and Standard Microsystems Corporation were
granted early termination of the waiting period on May 18, 2012,
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
On May 2, 2012, Microchip Technology signed a definitive
agreement to acquire Standard Microsystems Corporation for $37.00
per share in cash for about $939 million. The net value stood at
$766 million, excluding SMSC's cash and investments on its balance
sheet of approximately $173 million.
Microchip has already submitted the required non-U.S. filings
for pre-closing antitrust clearance applicable to the merger. The
filings were submitted in China, Korea, Germany and Turkey by the
end of May and early June.
Microchip expects this acquisition to be accretive to the bottom
line in the first quarter after its completion. The company
believes that Standard Microsystems' smart mixed-signal
connectivity solutions aimed at embedded applications will
perfectly complement Microchip's embedded control business. We view
this acquisition a definite positive. Standard Microsystems
reported net sales of $412 million in fiscal 2012, which ended in
February. The acquisition is expected to broaden Microchip's
existing product portfolio with the addition of Standard
Microsystems' new products and capabilities in the automotive,
industrial, computing, consumer and wireless audio markets.
Meanwhile, earnings estimates have declined in the last three
months even though the company has surpassed the first-quarter
results by a penny. A significant improvement in business is not on
the cards in the near term.
Nevertheless, we view the recent acquisition of Standard
Microsystems Systems as positive and maintain a Neutral
recommendation.
Our Neutral recommendation is supported by a Zacks #3 Rank,
which translates into a short-term rating of Hold.
MICROCHIP TECH (MCHP): Free Stock Analysis
Report
STANDARD MICROS (SMSC): Free Stock Analysis
Report
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