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Microchip Technology agrees to acquire Microsemi in $10B deal

Chipmaker Microchip Technology Inc. agreed to acquire semiconductor manufacturer Microsemi Corp.

The acquisition is valued at $68.78 per share and will be financed by approximately $3 billion worth of Microchip's current line of credit, approximately $5 billion worth of new debt, approximately $1.6 billion worth of cash from the consolidated balance sheet and $600 million worth of cash bridge loan.

The buyer said the deal would bolster its offerings in the data center, communications, defense and aerospace markets.

J.P. Morgan will act as Microchip's exclusive financial adviser, offering committed financing worth $5.6 billion. The transaction is anticipated to close in the second quarter.

The acquisition represents gross enterprise value of approximately $10.15 billion and a gross equity value of approximately $8.35 billion, accounting for Microsemi's cash and investments and net of debt as of Dec. 31, 2017.

The buyer also revised the range of its previously released guidance for net sales and GAAP and non-GAAP EPS for the fourth quarter ending March 31. The company now expects net sales to be flat to down 2% with a midpoint of down 1%, against expectations of net sales gaining 1% to falling 3% with a midpoint of down 1% in guidance released Feb. 6.

Moreover, the company now expects GAAP EPS to be in the range of 73 cents to 79 cents while non-GAAP EPS is expected to be in the range of $1.32 to $1.37. Previous guidance showed GAAP EPS in the range of 72 cents to 80 cents and non-GAAP EPS of between $1.30 and $1.39.