Standard Microsystems Approve Merger - Analyst Blog
11 Juillet 2012 - 2:30PM
Zacks
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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