Microchip Ups Offer For SSTI

Microchip Technology Inc. (MCHP: 27.12 0.00 0.00%) has raised its acquisition offer for Silicon Storage Technology, Inc. (SSTI: 3.19 0.00 0.00%). 

Under the revised terms, SST shareholders would be entitled to receive $3.00 per share in cash. Microchip earlier announced that it will acquire SSTI for $2.85 per share in cash or about $275 million in cash. 

Microchip proposed the revised terms in response to a competing offer from a private equity firm. The revised offer of $3.00 per share represents an approximate 42.8% premium to the amount that the holders of SST common stock would have received under the previously announced merger agreement between SST and Technology Resources Holdings, Inc. 

The acquisition is expected to close by the second quarter of calendar 2010. Silicon Storage is a global leader in embedded flash technology and the licensing of these technologies. Silicon Storage has several other businesses which include serial, parallel and specialty flash memories. 

Management expects that Silicon’s proprietary SuperFlash technology is a critical building block for advanced microcontrollers. This acquisition secures critical embedded flash technology for Microchip’s core microcontroller business, and will enable the company to get early access to advanced technologies compared to waiting for them to be produced in foundries. 

The acquisition also adds a strong patent portfolio to Microchip’s intellectual portfolio as it has over 360 granted patterns and over 180 patents that are pending. 

The transaction is expected to be accretive to the company’s business in the first full quarter after acquisition. Shares of Microchip closed at $26.88 in regular trading on Tuesday, down 20 cents over the prior day.