Are VTSS Shareholders Getting Enough?

By Chris Lange Published Mar 18, 12:30PM EDT

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Vitesse Semiconductor Corp. (NASDAQ: VTSS) announced Wednesday morning that it would be acquired by Microsemi Corp. (NASDAQ: MSCC). The definitive agreement carries an all-cash offer of $5.28 per share.

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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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.