Are VTSS Shareholders Getting Enough?

The offer represents a 32% premium on the average closing price of Vitesse over the past 30 days, ended on March 17.

The board of directors of Vitesse recommends that Vitesse’s stockholders tender their shares in the offer. The total transaction value is approximately $389 million.

The transaction is expected to be immediately accretive to Microsemi earnings within the first full quarter after the completion of the deal. To put a number to it, Microsemi expects the acquisition to add $0.16 to $0.20 per share in its first full fiscal year ending in September 2016.

Of course it would not be a merger without the CEOs commenting on it. James J. Peterson, chairman and chief executive of Microsemi, said:

This acquisition is further evidence of Microsemi’s continuing commitment to grow as a communications semiconductor company. Vitesse’s highly complementary technology suite will expand our product offering and accelerate growth with differentiated technology in emerging markets, while benefitting from the increased scale, consolidated infrastructure and cost savings of the combined entity.

Chris Gardner, CEO of Vitesse, said:

The proposed acquisition of Vitesse by Microsemi will create a powerful combination. I believe Microsemi will be able to leverage Vitesse’s Ethernet technology and capabilities further into the communications market and has the scale to implement the adoption of our industrial IoT strategy.

Microsemi shares did not respond to news and were relatively flat on Wednesday at $34.00, in a 52-week trading range of $20.61 to $35.01. The stock has a consensus analyst price target of $35.63.

Shares of Vitesse were up over 36% at $5.32 at midday. The consensus price target is $5.13, and the 52-week range is $2.70 to $5.34.

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