Contact: Scott Denne
Microchip Technology continues its acquisitive streak, reaching for Supertex in a $394m all-cash deal and paying an enterprise value-to-revenue multiple of 3.7x, placing it among the most expensive semiconductor transactions in recent memory. The deal puts a 35% premium on Friday’s Supertex share price and brings the stock to a level it hasn’t hit since late 2007.
As margins and growth around its core microcontroller business compress, Microchip has looked to M&A to bolster its growth, inking roughly two acquisitions per year since 2009, compared with four transactions altogether between 2002 and 2008. With the exception of its $939m reach for Standard Microsystems last year, Supertex is its largest purchase and comes at a relatively rich price. Semiconductor multiples have been depressed for years as more transactions are done with the aim of consolidation and cost-cutting. Over the past 24 months, only two comparable deals in this space have had higher multiples.
Supertex’s $65.9m in trailing revenue will do little for Microchip’s top line – it posts $1.87bn in trailing revenue. This deal gets Microchip exposure to several new markets, notably LED lighting. LEDs accounted for an expanding share of Supertex’s growing revenue, generating 18% of sales in the most recent quarter, up from 14% in 2013 and 10% in 2012.
For more real-time information on tech M&A, follow us on Twitter @451TechMnA.