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Which company will be next to star in the M&A saga?

As the merger talks between Qualcomm and Broadcom continue, another merger has been announced. In this latest episode of the M&A saga, Microchip is buying Microsemi for roughly $10billion.

That a deal has been made is no particular surprise because Microsemi has been the subject of rumours recently. The surprise is that Microchip is the acquirer; until now, its name hasn’t been mentioned.

Both companies have been fairly acquisitive over the last couple of years. Microsemi, to be honest, only started to raise its profile about 10 years ago. Until then, it was known as an analogue focused company targeting the aerospace and defence sectors. Since then, it’s bought quite a few companies, or parts of companies – including PMC-Sierra, Zarlink, Actel and Maxim. It now has fingers in many more pies.

Microchip has also been active over the last few years, with latest purchases including Micrel and Atmel.

In 2017, chairman and CEO Steve Sanghi announced Microchip 2.0, intended to make the company a ‘total system solutions provider for embedded systems’. “Even as we execute a very successful Microchip 2.0 strategy that is enabling organic revenue growth in the mid to high single digits,” said Sanghi, “Microchip continues to view accretive acquisitions as a key strategy to deliver incremental growth and stockholder value. The Microsemi acquisition is the latest chapter of this strategy.”

You can see the logic behind the deal. It strengthens Microchip’s analogue and mixed signal portfolio, it adds to its timing product line, brings a range of communications technologies and, interestingly, brings programmable logic technology and expertise.

So, while Qualcomm and Broadcom continue their courtship, we have to wonder which company will be the next star of the M&A saga?

Graham Pitcher

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