Skyworks to Acquire PMC-Sierra for $2 Billion in Cash

WOBURN, Mass. & SUNNYVALE, Calif., Oct. 05, 2015 – 

Skyworks Solutions, Inc. (NASDAQ: SWKS), an innovator of high performance analog semiconductors connecting people, places and things, and PMC-Sierra, Inc. (PMC) (NASDAQ: PMCS), a semiconductor and software solutions leader in storage, optical and mobile networks, today announced a definitive agreement under which Skyworks will acquire PMC for $10.50 per share in an all-cash transaction valued at approximately $2 billion. This acquisition solidifies Skyworks' position as a highly diversified analog, RF and mixed signal semiconductor leader by significantly expanding its product portfolio, customer base and end market applications. Upon completion of the acquisition, Skyworks expects annual revenues of more than $4 billion with gross margin in the 55 percent range and operating margin exceeding 40 percent.

"With our acquisition of PMC, Skyworks will be uniquely positioned to capitalize on the explosive demand for high performance solutions that seamlessly connect, transport and store Big Data," said David J. Aldrich, chairman and chief executive officer of Skyworks. "Specifically, we plan to leverage PMC's innovative storage systems, flash controllers, optical switches and network infrastructure solutions to expand our engagements with some of the world's leading OEMs and ODMs as well as emerging hyperscale data center customers. At a higher level, this complementary yet highly synergistic acquisition is consistent with our stated strategy of diversifying into adjacent vertical markets while leveraging our system-level expertise and global scale. PMC enables us to substantially expand our serviceable market within some of the fastest growing segments in technology including cloud storage and optical networking. Financially, we expect this transaction to create further economic value for our shareholders upon closing, with immediate margin expansion and accretion. After we implement $75 million of synergies, we expect at least $0.75 of incremental non-GAAP diluted earnings per share on an annual basis."

"The PMC team is excited to join forces with Skyworks to realize our vision of transforming the broader communications landscape through unparalleled product breadth and operational scale," said Greg Lang, president and chief executive officer of PMC. "Given Skyworks' deep global sales channels and leadership applications support, underpinned by a world class supply chain, we could not have found a better partner. Together, we plan to develop a wider range of leading-edge solutions for our customers, target new growth vectors and enable some of the most exciting networking and storage platforms in the world, while delivering immediate value for our shareholders."

Under the terms of the agreement, PMC's stockholders will receive $10.50 in cash for each share of PMC common stock held at closing. This price represents a 37 percent premium to the close of PMC's stock as of October 5, 2015.

Skyworks intends to fund the acquisition with cash on hand from the combined companies and with new, fully-committed debt financing. The closing of the transaction is not subject to financing conditions.

The Boards of Directors of each company have approved the transaction, which is expected to close in the first half of calendar 2016, subject to PMC shareholder approval, receipt of regulatory approvals and other customary closing conditions.

Excluding any non-recurring acquisition-related charges and amortization of acquired intangibles, Skyworks expects the acquisition to be immediately accretive to non-GAAP earnings post-closing and will finalize estimates of the transaction's financial impact as well as the accounting for the transaction upon deal close.

Skyworks Business Update

Based on preliminary results, Skyworks expects to deliver approximately $880 million in revenue and $1.52 of non-GAAP diluted earnings per share for the fourth quarter of fiscal 2015. "Skyworks' sustained outperformance is being driven by the growing adoption of our integrated mobile systems and new opportunities across the Internet of Things," said Donald W. Palette, executive vice president and chief financial officer.

Skyworks Conference Call

Skyworks will be hosting a conference call tomorrow, October 6, at 9:00 a.m. Eastern time to discuss the acquisition. To listen to the conference call via the Internet, please visit the investor relations section of Skyworks' website. To listen to the conference call via telephone, please call 877-260-8898 (domestic) or 612-332-1210 (international), confirmation code: 370618

Playback of the conference call will begin at 9:00 p.m. Eastern time on October 6, and end at 9:00 p.m. Eastern time on October 13. The replay will be available on Skyworks' website or by calling 800-475-6701 (domestic) or 320-365-3844 (international), access code: 370618

About Skyworks

Skyworks Solutions, Inc. is empowering the wireless networking revolution. Our highly innovative analog semiconductors are connecting people, places and things spanning a number of new and previously unimagined applications within the automotive, broadband, cellular infrastructure, connected home, industrial, medical, military, smartphone, tablet and wearable markets.

Headquartered in Woburn, Massachusetts, Skyworks is a global company with engineering, marketing, operations, sales, and service facilities located throughout Asia, Europe and North America. For more information, please visit Skyworks' website at: www.skyworksinc.com.

About PMC

PMC is the semiconductor and software solutions innovator transforming networks that connect, move and store big data. Building on a track record of technology leadership, the company is driving innovation across storage, optical and mobile networks. PMC's highly integrated solutions increase performance and enable next-generation services to accelerate the network transformation. For more information, visit www.pmcs.com.

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