What: Shares of PMC-Sierra (NASDAQ: PMCS) rose more than 14% on Monday morning. The semiconductor designer was lifted by a fresh buyout bid from industry rival Microsemi (MSCC), setting PMC-Sierra up for a bidding war.
So what: Microsemi's acquisition offer is priced at $11.50 per PMC-Sierra share, with 76% of the price to be delivered in cash and the rest in Microsemi shares. It works out to a total market value of $2.4 billion and $2.2 billion in enterprise value.
Compare and contrast this bid with the earlier buyout swing from Skyworks Solutions (SWKS -0.69%), and you'll find that the new bid looks more generous. The Skyworks bid stopped at $10.50 per share and a $2.0 billion enterprise value.
Now what: PMC-Sierra's shares have now gained 57% since Oct. 5, boosted by two competing buyout bids. Investors seem ready for continued interest, since PMC-Sierra now trades just above Microsemi's stated buyout price.
The ball is now in Skyworks' court. That first offer had the advantage of being entirely cash-backed, meaning that PMC-Sierra investors don't have to worry about Skyworks' share prices living up to the promised acquisition promises. Furthermore, PMC-Sierra's board of directors has already approved the Skyworks offer while Microsemi comes in without an official go-ahead from the target company.
On the other hand, Microsemi's proposal has fewer regulatory hurdles to jump, which muddies the picture somewhat. It's unclear exactly how much further Skyworks needs to sweeten its offer in order to stay in this race.
Skyworks solutions shares fell approximately 1% on the news. Microsemi is trading roughly 6% lower. The combined market value of these three stocks remained almost unchanged as the individual tickers moved around.