MANHASSET, N.Y.--The board of directors of Zarlink Semiconductor Inc. approved a takeover offer by Microsemi Corp. after Microsemi sweetened the deal by about 19 percent, the companies said Thursday (Sept. 22).
The companies said they entered into a so-called support sgreement which looks to clinch the deal to finalize Microsemi (Aliso Viejo, Calif.) acquiring Zarlink (Ottawa, Ontario).
Microsemi will pay about $630 million to acquire Zarlink, the companies said. The total transaction value is approximately $525 million, net of Zarlink's cash which is currently $107 million. Microsemi will pay $3.86 for each share of Zarlink, a 19 percent increase from the previous offer to buy Zarlink for $3.41 per share, Microsemi said.
The amended offers represent a 67 percent premium over the closing price of the shares and a 48 percent premium over the closing price of the debentures on the on the Toronto Stock Exchange on July 19, the day prior to the initial public announcement of Microsemi's proposal to acquire Zarlink.The amended offers represents a 15 percent premium to the closing price of both the shares and debentures on the Toronto Stock Exchange on Wednesday.
Thursday's offer is the fourth that Microsemi has made to acquire Zarlink, a supplier of mixed-signal ICs. Zarlink's board previously rejected three other offers, calling them to low. Eventually, Zarlink also adopted a "poison pill" to thwart a potential takeover by Microsemi. Last month, Microsemi formally launched a hostile takeover bid to acquire Zarlink directly from shareholders. The hostile takeover bid was to close Thursday.
Zarlink said its board unanimously approved the latest Microsemi offer after receiving advice from its financial advisors, RBC Capital Markets and Canaccord Genuity. Zarlink's board determined that the offer is fair to its shareholders and debenture holders and that it is in the best interests of the company to support and facilitate the offers of both shares and debentures, according to the company.
"We are excited to add Zarlink to the Microsemi family and to enter into this transaction on a friendly basis," said James J. Peterson, Microsemi's president and chief executive officer, in a statement. "Entering the process and performing diligence enabled us to confirm the compelling strategic fit between the two companies."
The support agreement includes, among other things, a $24.2 million breakup fee payable by Zarlink in certain circumstances, including the acceptance of an unsolicited superior proposal from a third party. Microsemi has also been granted a right to match in respect of competing proposals, the company said.
No approval of the shareholders of Microsemi is required in connection with the proposed transaction, Microsemi said.
Microsemi offers $549 million to buy Zarlink