MACOM Technology Solutions Holdings agreed to acquire Applied Micro Circuits Corporation (AppliedMicro") for approximately $8.36 per share, consisting of $3.25 in cash and 0.1089 MACOM shares per share of AppliedMicro. The deal, which represents a 15.4% premium over AppliedMicro's closing price of $7.25 on November 18th, is valued at approximately $770 million. MACOM plans to divest AppliedMicro's non-strategic Compute business within the first 100 days of closing. The company said it is already talking to interested parties.
MACOM said the deal will accelerate its growth in optical technologies for Cloud Service Providers and Enterprise Network customers.
AppliedMicro, which supplies semiconductors for compute and computing in data centers, has approximately $165 million in TTM revenue (including the Compute business) and $82 million of cash and short-term investments. AppliedMicro's leadership PAM4 solutions based on FinFET technology and custom engagements with top-tier Data Center and service provider customers is expected to strengthen MACOM's competitive position with those customers
MACOM and AppliedMicro's pro forma combined TTM revenue was approximately $709 million including AppliedMicro's Compute business, or approximately $644 million excluding the Compute business
AppliedMicro's Connectivity business is highly complementary to MACOM's product portfolio, through the addition of market-leading OTN framers, MACsec Ethernet networking components and the industry's leading single-lambda PAM4 platform
Commenting on the transaction, John Croteau, President and Chief Executive Officer, stated, "This transaction will accelerate and expand MACOM's breakout opportunity in Enterprise and Cloud Data Centers. MACOM will now be able to provide all the requisite semiconductor content for optical networks - analog, photonic and PHY - from the switch to fiber for long haul, metro, access, backhaul and Data Center. AppliedMicro's 100G to 400G single-lambda PAM4 platform should perfectly complement MACOM's leadership in analog and photonic components for Data Centers.
"Notably, the IEEE recently recommended the adoption of AppliedMicro's single lambda PAM4 solution to be an industry standard for enterprise and Data Center connectivity, positioning this technology as the solution of choice going forward. Additionally, AppliedMicro's Connectivity business aligns well with MACOM's differentiated, high-growth business model, offering non-GAAP gross margins well in excess of MACOM's long term target operating model, long product life cycles, and sticky customer relationships."
"This is an exciting day for AppliedMicro, and we are pleased to be joining forces with MACOM. The transaction affirms the value that our employees have created and provides a strong path forward for our Connectivity business while delivering AppliedMicro stockholders a robust premium," said Paramesh Gopi, President and CEO, AppliedMicro. "This transaction will create an industry powerhouse with the scale, deep customer relationships, innovative technology, and enabling products that will help deliver explosive growth in Enterprise and Cloud Data Centers. In addition, this agreement provides a promising path forward for the Compute business, which is in the process of bringing AppliedMicro's highly-competitive third-generation X-Gene processor to market. X-Gene is well-positioned to address the large opportunity for mainstream server processors with its proven high performance cores, scalable interconnect and high per socket memory capabilities."
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