Microchip Technology Incorporated (MCHP) announced that it has amended its agreement to acquire Silicon Storage Technology Inc. (SSTI).
Silicon Storage is a global leader in embedded flash technology and in the licensing of these technologies. It has several other businesses including serial, parallel and specialty flash memories.
Under the revised terms, Silicon Storage shareholders would be entitled to receive $3.05 per share in cash compared to the previous offer of $3.00 per share (second amendment). This second amendment was in response to an offer made by another party to Silicon’s Strategic Committee on March 2, 2010.
In November 2009, Technology Resource Holdings (controlled by Prophet Equity LP) made a $2.10 per share offer to buy Silicon Storage.
This was countered in early February when Microchip entered the fray with an offer of $2.85 per share in cash or about $275 million.
Later, Microchip revised its offer in response to a competing offer from a private equity firm. The offer was increased to $3.00 per share in cash.
In connection with the latest amendment, Microchip purchased approximately 19.9% of the outstanding shares of the common stock of Silicon Storage at $3.05 per share in cash.
Microchip stated that if it fails to acquire Silicon Storage, it will not use its voting rights to prevent SSTI from accepting a better proposal. In such a case, Microchip has the option to sell its shares to SSTI at $3.05, the price at which these shares were bought.
The $3.05 per share represents an approximate 45.2% premium to the amount that the holders of Silicon Storage common stock would have received under its merger with Technology Resources Holdings Inc.
The acquisition is expected to close in the second quarter of calendar 2010, subject to approval by Silicon Storage’s stockholders and other customary closing conditions. Silicon Storage has scheduled a special meeting of stockholders for April 8, 2010 to consider the transaction.
Management expects that Silicon’s proprietary SuperFlash technology is a critical building block for advanced microcontrollers. This acquisition secures critical embedded flash technology for Microchip’s core microcontroller business and will enable the company to get early access to advanced technologies instead of waiting for these to be produced in foundries.
The acquisition also adds a strong patent portfolio to Microchip’s intellectual offerings as it has over 360 granted patents and over 180 patents that are pending.
“MCHP” Free Stock Analysis: Buy? Sell? Hold?
“SSTI” Free Stock Analysis: Buy? Sell? Hold?
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