Zarlink Semiconductor Inc. (ZL) climbs on Microsemi buy

Posted on: July 20th, 2011
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Zarlink Semiconductor Inc. (TSX: ZL) saw its shares balloon 48.8% to $3.75 Wednesday, on word it was a takeover target from Microsemi Corporation (Nasdaq: MSCC) Volume for Zarlink totaled 466,000 shares, compared to an all-day average of less than 24,000.

Microsemi, based out of Irvine, Calif. and, a leading provider of semiconductor solutions differentiated by power, security, reliability and performance, announced today 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 $3.35 Canadian per share in cash.

The proposed transaction has a total equity value of $548.7 million U.S. based on a fully diluted share count and represents a 40% premium to Zarlink’s share price as of July 19, 2011, and a 43% premium to Zarlink’s trailing 30-day average share price.

Microsemi today has sent a letter to Zarlink’s board of directors outlining its proposal. 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.

In a news release dated early Wednesday, Microsemi CEO James Peterson was quoted as saying, “We remain interested in engaging with Zarlink’s board to complete a transaction that delivers value to shareholders.
“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.”

Headquartered in Ottawa, Zarlink designs mixed-signal semiconductor products for a range of communications and medical applications. Zarlink offers more than 900 active products, and ships approximately 100 million ICs per year to over 400 customers.

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