Vitesse Semiconductor Corp. (NASDAQ: VTSS) the Ethernet chipmaker which has announced its acquisition by major chip-maker Microsemi Corporation (NASDAQ:MSCC) for $389 million on Tuesday. However, there are questions being raised by investor community if the deal is fair on all counts: are ‘fiduciary duties’ upheld, is the value of the company being maximized and importantly have all of the material benefits been disclosed. Their final goal is to know if the board is justified in its action to it’s stockholders.
As per the present terms, a shareholder of Vitesse is eligible for $5.28 cash per share. According to Vitesse Semiconductor Corp. (NASDAQ: VTSS) board, the deal includes a 36% premium on the share price at the time of trading closure on Tuesday.
Meanwhile, MSCC shares have spiked with gains reported at roughly 2%.
Vitesse Semiconductor Corp. has been a profitable-buy for MSCC as it will help the chip maker to consolidate its market presence. Vitesse Semiconductor Corp. (NASDAQ: VTSS) with its disappointing financial results in recent times was a prime candidate for the likes of MSCC, as it has a formidable product line. Vitesse has in additional to Ethernet switching, PHY chips for use in receivers and domain software for the same. Additionally, it also has cross-point switching ICs, besides IP cores which are to be licensed to third-party manufacturers. This may include – Broadcom as well as Marvell. For Microsemi, the acquisition is consolidation within its networking and telecom market segment.
Vitesse Semiconductor Corp. (NASDAQ: VTSS), according to CEO of Microsemi, is an acquisition which will reinforce the company’s focus on communications semiconductor components. The former’s product portfolio will complement its own products and lead to accelerated growth in emerging markets. The differentiated technology which Microsemi offers is viewed as a massive opportunity for growth and scaling based on Vitesse core competencies.