October 24, 2006 -- Microsemi Corp. announced that it has entered into a definitive agreement to acquire PowerDsine Ltd. With the acquisition, Microsemi says it enhances its strong analog and mixed signal design capabilities to include PowerDsine's broad range of Power over Ethernet (PoE) platforms.
According to a press release, under the terms of the agreement, each PowerDsine shareholder will receive $8.25 per share in cash and 0.1498 shares of Microsemi common stock for each share of PowerDsine common stock. Based on closing stock prices on October 23, the total consideration values PowerDsine at $11.00 per share, an 18.5% premium to PowerDsine's last closing stock price, for a total consideration of $245 million on a fully-diluted basis, or $168 million net of cash acquired. Microsemi expects the transaction to be neutral to slightly dilutive to EPS for the first 12 months after closing and accretive thereafter.
"PowerDsine is a recognized leader in its PoE product offerings for a wide range of rapidly growing applications," comments James J. Peterson, Microsemi's president and CEO. "We believe the addition of PowerDsine's experienced team of analog and mixed signal design engineers will yield excellent results both in the PoE market and more broadly across a number of important commercial analog and mixed signal markets we serve today. We are also excited to develop Microsemi's presence in Israel to leverage the country's outstanding engineering talent base."
Microsemi says the transaction complements its analog mixed-signal product portfolio and bolsters the company's presence in the communications market. For its part, PowerDsine says it has been "a pioneer" in the development of PoE, a technology that allows power to be transmitted over the same network cable as data; the company is recognized as a leader in this fast-growing market.
PowerDsine estimates that the number of PoE enabled switch ports is estimated to grow from approximately 28 million in 2005 to over 100 million by 2009. The growing demand for PoE capability has been driven by a range of networked applications including VoIP phones, WLAN access points, and remote security cameras that increasingly rely upon power delivered over the network. Ethernet switch vendors look to PoE platforms from PowerDsine to integrate this complex power management and communications capability into their product offerings.
Microsemi will continue to support PowerDsine's product roadmaps for both the midspan and integrated product lines.
"We are very pleased to join Microsemi's team," remarks Igal Rotem, CEO of PowerDsine. "This business combination will result in a very powerful value proposition to customers, investors, and employees. Microsemi shares PowerDsine's vision of providing customers with solutions that are designed from a system point of view. This integration will provide the combined resources and capabilities of both companies to further address and fulfill the needs of our customers."
PowerDsine employs approximately 136 employees worldwide, which includes 94 engineers, and has facilities in Hod Hasharon, Israel; San Jose, California; and Melville, New York; and regional sales offices in China, India, Japan, Taiwan, and the United Kingdom.
The boards of directors of both companies have unanimously approved the definitive agreement. The transaction is subject to satisfaction of customary closing conditions that include Israeli court approval, regulatory approvals, and the PowerDsine shareholders' approval, and is expected to close in the second quarter of Microsemi's fiscal year 2007. After the transaction, Microsemi will have approximately 79 million fully diluted shares outstanding, with current Microsemi shareholders owning approximately 96% and current PowerDsine shareholders owning approximately 4% of the combined company's shares.
Thomas Weisel Partners LLC served as financial advisor to Microsemi and Needham & Company, LLC provided a fairness opinion to Microsemi. Citigroup served as financial advisor to PowerDsine.