Microsemi Announces Proposal to Acquire Zarlink for CAD $3.35 in Cash

July 20, 2011 by Jeff Shepard

Microsemi Corp. announced that it has made a proposal to the board of directors of Zarlink Semiconductor Inc. to acquire all of the outstanding shares of the company for CAD $3.35 per share in cash.

The proposed transaction has a total equity value of USD $548.7 million based on a fully diluted share count and represents a 40 percent premium to Zarlink’s share price as of July 19, 2011, and a 43 percent premium to Zarlink’s trailing 30 day average share price. The CAD $3.35 proposal exceeds every Zarlink closing share price over the last five years. Microsemi’s proposal recognizes the recent efforts of Zarlink and its employees to stabilize its business, and provides the opportunity for Zarlink to benefit from Microsemi’s management expertise, technology leadership, and sales platform.

This proposal follows several earlier attempts by Microsemi to engage in private discussions with Zarlink, including two written proposals to Zarlink’s board of directors. Both proposals, including the most recent one made on June 17, 2011 proposing an all-cash purchase price per share in a negotiated transaction of between CAD $3.25 and $3.55, were rejected by Zarlink without discussion.

"We remain interested in engaging with Zarlink’s board to complete a transaction that delivers value to shareholders," said James J. Peterson, Microsemi President and Chief Executive Officer. "We are committed to building and strengthening its business, and believe our proposal provides a superior outcome for Zarlink’s shareholders, employees, customers, and the local economy."

"We believe this proposed acquisition provides considerable growth opportunities, and greatly benefits the shareholders of both companies," added Peterson. "Zarlink’s shareholders will receive a substantial premium, in cash, and without execution or macroeconomic risk, while Microsemi’s shareholders will benefit from the integration of this highly accretive opportunity."

Zarlink responded that it has considered the July 20, 2011 proposal and unanimously concluded with the assistance of its advisors that it significantly undervalues the company.

"The Zarlink Board has always been prepared to consider and pursue strategic transactions or plans and will consider all appropriate alternatives which capture the true value of the company for its stakeholders" said Adam Chowaniec, Chairman of Zarlink’s Board of Directors. "Zarlink continues to make strong progress as it focuses on growth opportunities in the communication and medical markets. Our line circuit and network timing products are winning new designs with customers and gaining market share. We have been aggressively investing to build a unique strategic position in the medical wireless market, and with our radio products now being designed in with the leading device manufacturers we are at a point of growth inflection with this segment of our business. Microsemi’s proposal clearly does not capture the value that has been created or that exists in the company".