Pericom Semiconductor Corp. (NASDAQ: PSEM) led the market Thursday morning, following the announcement that it will be acquired by Diodes Inc. (NASDAQ: DIOD). The boards of both companies have approved the transaction, which is still subject to approval by Pericom’s shareholders. The transaction is expected to close in the fourth quarter of 2015.

At the effective date of the merger, each share of Pericom will be converted into the right to receive $17.00 in cash, without interest. The aggregate consideration will be roughly $400 million. The purchase price is representative of a 40% premium to Wednesday’s closing price ($12.18).

Diodes expects to fund the purchase price of the acquisition mainly by drawing down additional capital following a recent $200 million increase to its existing credit facility. Bank of America Merrill Lynch acted as sole lead arranger for the credit facility increase and financial advisor on the transaction.

Dr. Keh-Shew Lu, president and CEO of Diodes, commented on the transaction:

The proposed acquisition of Pericom accelerates the attainment of Diodes’ goal of a $1 billion annual revenue run rate with 35 percent gross margin, while being immediately accretive to earnings. This transaction broadens Diodes’ analog footprint and adds a strong mixed-signal connectivity offering that will drive expanded product content in target market applications. Also, Pericom’s extensive timing product lines complement Diodes’ standard product portfolio and broaden our analog footprint. We look forward to integrating the Pericom team into Diodes’ family as we work closely with our customers to familiarize them with our new expanded offerings.

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Alex Hui, president and CEO of Pericom, said:

Diodes’ size and scale provides an excellent platform for our products to gain access to a broader customer base and drive a higher level of growth than Pericom would be able to achieve as a standalone company. Most importantly, this transaction delivers significant value for our shareholders as well as for our employees and customers by creating the opportunity to be part of a larger organization and enabling even greater future success for Pericom.

Shares of Pericom were up 37.4% at $16.74 Thursday morning. The stock has a consensus analyst price target of $16.67 and a 52-week trading range of $9.00 to $16.83.

Diodes shares were up 8.2%, at $21.23 in a 52-week range of $18.42 to $30.65. The consensus price target is $28.63.

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