M/A-Com Technology Solutions To Buy Mindspeed Technologies In $272 Mln Deal

(RTTNews) - Shares of Mindspeed Technologies Inc. (MSPD) gained more than 67 percent in extended trades Tuesday after the semiconductor solutions provider said it agreed to be acquired by analog semiconductor solutions provider M/A-COM Technology Solutions Holdings, Inc. (MTSI) in a deal valued at about $272 million.

Newport Beach, California-based Mindspeed Technologies said that under the deal, Lowell, Massachusetts-based M/A-COM Technology Solutions Holdings, Inc. or MACOM intends to commence a tender offer to purchase each outstanding common share of Mindspeed for $5.05 in cash, without interest. The tender offer represents a premium of about 66 percent to Mindspeed's closing sock price of $3.04 on Monday, November 4.

In late April, Mindspeed said it retained Morgan Stanley & Co. LLC as a financial advisor to assist its board in evaluating various strategic alternatives available to the company.

Under the deal, MACOM will also assume certain equity awards held by Mindspeed employees. The boards of both companies have approved the transaction. The two companies currently expects the transaction to close by the end of calendar year 2013.

Further, Mindspeed said it is in advanced talks with a potential strategic buyer for its wireless business and expects to sell the business prior to closing of the MACOM transaction. The company noted that the wireless sale process will not impact the closing of the MACOM transaction or the transaction consideration paid to Mindspeed shareholders.

Separately, Mindspeed reported a loss for the fourth quarter that widened to $51.77 million or $1.26 per share from $6.06 million or $0.15 per share in the year-ago period. The latest quarter's results include impairment of goodwill of $26.60 million and a charge for the impairment of definite-lived intangibles of $22.40 million related to the company's wireless infrastructure reporting unit.

Adjusted net income for the quarter was $874 thousand or $0.02 per share, compared to adjusted net loss of $2.63 million or $0.07 per share in the same period last year. Total net revenue for the quarter was $36.04 million, down from $36.26 million in the prior-year quarter.

On average, analysts polled by Thomson Reuters expected the company to report net loss of $0.02 per share for the quarter on revenues of $36.03 million.

For fiscal 2013, Mindspeed's net loss widened to $89.15 million or $2.21 per share from $32.75 million or $0.89 per share in the prior year. Adjusted net income for the year was $5.62 million or $0.14 per share, compared to adjusted net loss of $14.91 million or $0.41 per share in the previous year. Total net revenue for the year rose to $151.40 million from $141.01 million last year.

Analysts expected the company to report loss of $0.05 per share for the year on revenues of $146.59 million.

In a separate statement, MACOM said it expects the Mindspeed acquisition to be accretive to its adjusted earnings per share between $0.15 and $0.20 in fiscal 2014, and between $0.25 and $0.30 per share in fiscal 2015.

John Croteau, President and CEO of MACOM, said, "This acquisition will position MACOM as a leading global provider of 100G optical solutions which underscores our growth strategy in commercial communications markets. Our interest in Mindspeed is the company's high-growth, high-margin HPA business as well as its cash-generating VoIP business."

Croteau added that the acquisition will also diversify MACOM's served markets to include enterprise applications, while enabling the company to strengthen its core RF and Microwave position with SiGe technology. MACOM estimates that the acquisition will result in substantial synergies from corporate overhead, SG&A, and exit from underperforming businesses.

MACOM expects to finance the acquisition through a combination of cash on hand and its existing undrawn revolving credit facility.

MACOM noted that Mindspeed also has a communications processor business, which currently does not align with MACOM's long-term strategic focus. The company said that therefore, additional options will be explored for that business while continuing to support its customers. Separately, in the event Mindspeed's wireless business is not sold, it will be restructured and wound down while continuing to support its customers.

MSPD closed Tuesday's regular trading session at $2.97, down $0.07 or 2.30 percent on a volume of 1.87 million shares. However, in after-hours, the stock gained $2.01 or 67.68 percent to $4.98.

MTSI closed Tuesday's regular trading session at $16.73, down $0.69 or 3.96 percent on a volume of 75,144 shares.