Microsemi increases, extends offer for Zarlink's 6% convertibles

By Angela McDaniels

Tacoma, Wash., Sept. 22 - Microsemi Corp. increased its offer for Zarlink Semiconductor Inc.'s common shares and 6% subordinated convertible debentures due Sept. 30, 2012, and Zarlink's board of directors recommends that holders accept the offer, according to a joint news release from the companies.

The offer price was increased to C$1,624.49 per C$1,000 principal amount of convertibles from C$1,367.35. Holders will also receive accrued interest. The price per share was increased to C$3.98 from C$3.35.

The amended price is a 48% premium over the closing price of the convertibles on July 19, the day before the public announcement of Microsemi's proposal to acquire Zarlink, and a 15% premium over the closing price of the convertibles on Sept. 21.

The offers were extended to 5 p.m. ET on Oct. 12 from 5 p.m. ET on Sept. 22.

The offers are being conducted through Microsemi subsidiary 0916753 B.C. They began on Aug. 17.

Zarlink rejected Microsemi's previous offer as "financially inadequate and opportunistic" and said the price "significantly undervalued" Zarlink and its future prospects.

In the latest news release, Microsemi president and chief executive officer James Peterson said, "We are excited to add Zarlink to the Microsemi family and to enter into this transaction on a friendly basis."

The offers for the shares and convertibles are subject to the receipt of a number of shares that, when combined with the shares already held by Microsemi and the shares underlying the tendered convertibles, represents at least two-thirds of the outstanding shares on a fully diluted basis.

The transaction is not subject to a financing condition. Microsemi has received a financing commitment from Morgan Stanley Senior Funding, Inc. that includes an US$800 million seven-year senior term loan facility.

Once the offers are completed, Microsemi plans to acquire the remaining shares and convertibles as soon as practicable by way of a compulsory acquisition under the Canada Business Corporations Act or by way of a subsequent acquisition transaction.

The information agent is Laurel Hill Advisory Group Co. (877 452-7184 or assistance@laurelhill.com).

Zarlink makes mixed-signal chip technologies for communication and medical applications and is based in Ottawa. Microsemi makes semiconductors and is based in Aliso Viejo, Calif.

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