MACOM Technology Solutions Holdings, Inc. (MACOM) has entered into a definitive agreement to acquire AppliedMicro Circuits Corp. The acquisition, valued at approximately $770 million, allows MACOM to strengthen its portfolio for the data center market, adding OTN framers, MACsec Ethernet networking components and a single-lambda PAM4 platform. MACOM expects the deal to close in the first calendar quarter of 2017.

MACOM is paying approximately $8.36 per share for AppliedMicro, consisting of $3.25 in cash and 0.1089 share of MACOM per share of AppliedMicro. The share price for AppliedMicro represents a 15.4 percent premium above the company’s closing price of $7.25 on Friday, November 18th. MACOM gains AppliedMicro's cash and short-term investments, which were $82 million on September 30, 2016.

Once the deal closes, MACOM plans to divest the compute segment of AppliedMicro, as this business segment is not aligned with MACOM's strategy.

AppliedMicro's revenue over the past 12 months was approximately $165 million, including the compute segment. The trailing 12-month combined revenue of the two companies was approximately $709 million with AppliedMicro’s compute business or $644 million excluding it.

John Croteau, MACOM president and CEO, said, "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. 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."

For more information, review the presentation given by MACOM management on a conference call with financial and industry analysts, following the announcement on 21 November 2016.

2016-11-21 MACOM-AppliedMicro Acquisition Conference Call Presentation by speedybits on Scribd