Microchip Technology announced its acquisition of Standard Microsystems Corporation (SMSC) on May 2, 2012, and completed the deal on August 2, 2012. Microchip offered $37 in cash for each SMSC share, valuing the equity at about $939 million; after accounting for SMSC’s cash and investments, the stated enterprise value was about $766 million.
When did Microchip acquire SMSC?
The companies announced a definitive merger agreement on May 2, 2012. The merger closed on August 2, 2012, when SMSC became a wholly owned subsidiary of Microchip and SMSC shares stopped trading.
The agreement was signed on May 1, 2012, by Microchip, SMSC and Microchip Technology Management Co. Regulatory clearances followed during May through July; Microchip reported receiving China clearance on July 31. The deal therefore took roughly three months from announcement to closing.
How much did Microchip pay?
Microchip offered $37.00 in cash for each SMSC share. The companies described the transaction as approximately $939 million in equity value. They also cited an enterprise value of approximately $766 million, calculated after excluding about $173 million in SMSC cash and investments. Equity value reflects the value attributed to shareholders; enterprise value adjusts for cash and investments when describing the business acquired.
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The price and valuation figures are from the companies’ 2012 transaction announcement. They are distinct measures, not competing estimates of the same amount.
What did SMSC make?
SMSC supplied connectivity and control technologies for embedded systems rather than a single consumer-facing product. Its portfolio included:
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- USB: connectivity components, including USB hub technology.
- MOST automotive networking: technology for connecting devices and systems in vehicles.
- Wireless audio: Kleer and JukeBlox solutions.
- Embedded system control and thermal management: components and technologies for embedded products.
- RightTouch capacitive sensing: touch-sensing technology.
Microchip said the acquisition would expand its smart-connectivity offerings for embedded markets, particularly automotive, industrial, computing, consumer and wireless audio. CEO Steve Sanghi described SMSC’s smart mixed-signal connectivity solutions for embedded applications as an ideal complement to Microchip’s embedded-control business.
What did SMSC bring to Microchip’s business?
The deal combined SMSC’s connectivity portfolio with Microchip’s embedded-control business. The strategic fit was not simply a matter of adding another chip maker: SMSC brought technologies that connected, sensed or managed systems in vehicles and other embedded products, across markets Microchip identified as priorities.
Microchip’s maintained SMSC page directs visitors to current automotive USB products, USB hub ICs, MOST technology and capacitive-touch sensors. That catalog presence shows several product areas associated with SMSC remain visible in Microchip’s current offerings; it does not establish that every acquired product or brand is still sold unchanged.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How large was SMSC before the deal?
For the fiscal year ended February 29, 2012, SMSC reported net sales of $412 million. Microchip’s 2012 materials also cited a 54.4% non-GAAP gross margin and non-GAAP operating profit equal to 12% of sales. These are figures for the period and accounting measure identified by Microchip, not a forecast of future performance.
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