Contact: Scott Denne
Microchip Technology prints its first major international purchase, picking up Taiwan’s ISSC Technologies for $328.5m. Despite averaging two acquisitions per year since 2009 and getting about two-thirds of its revenue from Asia, this is its first M&A foray into the region.
The appeal of avoiding US taxes by putting its foreign cash to work is apparent in the multiple Microchip’s paying. The 4.3x trailing 12-month revenue makes ISSC the highest-valued company Microchip has bought. Not all of the multiple can be attributed to ISSC’s location – its revenue doubled to $69.2m last year, giving it an atypical growth rate for a Microchip target.
ISSC likely won’t be Microchip’s last major foreign acquisition (it previously bought a European vendor, EqcoLogic, for $9m). Microchip’s stock price is up more than 200% since embarking on its recent M&A tear in 2009 (before that year, it only inked four purchases). Also, about $2bn of its roughly $2.1bn in cash at the end of last quarter is still overseas.
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