Analog chipmaker Macom Technology to buy AppliedMicro Circuits for $770 mn

Analog chipmaker Macom Technology Solutions Holdings Inc today struck a deal to buy its peer AppliedMicro Circuits Corp for about $770 million in order to expand into optical technologies for cloud service providers and enterprise network customers.

Under the deal, Macom is offering to pay $8.36 per share, consisting of $3.25 in cash and 0.1089 of its shares for each share of AppliedMicro.

The transaction value is approximately $770 million, or approximately $688 million net of AppliedMicro's cash position of approximately $82 million.

Post closing, AppliedMicro shareholders are expected to own around 15 per cent of the combined company.

Macom expects to fund the cash portion of the deal from cash on hand.

The boards of directors of both companies have approved the transaction, which is expected to close in the first quarter of 2017.

Macom intends to divest AppliedMicro's Compute business as the business does not strategically align with its long-term focus.

AppliedMicro Circuits is a leader in connectivity and computing solutions for next-generation cloud infrastructure and data centers.

The Santa Clara, California-based company delivers silicon solutions that dramatically lower total cost of ownership.

Macom said that AppliedMicro's connectivity business is highly complementary to its own product portfolio, through the addition of market-leading OTN framers, MACsec Ethernet networking components and the industry's leading single-lambda PAM4 platform.

The acquisition is expected to accelerate Macom's significant growth in optical technologies for cloud service providers and enterprise network customers serving the high-growth, high-margin data center market.

Commenting on the transaction, John Croteau, president and CEO of Macom said, "This transaction will accelerate and expand MACOM's breakout opportunity in Enterprise and Cloud Data Centers. MACOM will now be able to provide all the requisite semiconductor content for optical networks - analog, photonic and PHY - from the switch to fiber for long haul, metro, access, backhaul and Data Center.''

''AppliedMicro also provides value-added technologies including SerDes, high speed analog-to-digital and digital-to-analog converters with industry-leading engineering competencies and long product lifecycles. Importantly, we expect that this transaction will establish MACOM with an incumbent position supplying strategic components and enterprise and cloud Data Center customers,'' he added.