Microsemi Corp. Enters Definitive Agreement to Acquire PMC-Sierra, Inc.

ALISO VIEJO and SUNNYVALE, CA -- Microsemi Corporation and PMC-Sierra, Inc. have entered into a definitive agreement under which Microsemi will acquire PMC for $9.22 in cash and 0.0771 of a share of Microsemi common stock for each share of PMC common stock through an exchange offer. The transaction is valued at approximately $2.5 billion and represents a 77.4 percent percent premium to the closing price of PMC's stock as of Sept. 30, 2015.

"We are pleased PMC has accepted our compelling strategic offer, which clearly benefits shareholders of both Microsemi and PMC. We can now shift our focus to realizing the significant synergies identified during our comprehensive analysis," said James J. Peterson, Microsemi's chairman and CEO. "As we have previously stated, this acquisition will provide Microsemi with a leading position in high performance and scalable storage solutions, while also adding a complementary portfolio of high-value communications products. As we integrate the team and drive profitability, our combined company will benefit from increased scale, industry-leading margins, diversified market exposure, consolidated infrastructure and substantial cost savings."

The transaction is expected to be immediately accretive to Microsemi's non-GAAP EPS and free cash flow. Microsemi anticipates achieving more than $100 million in annual cost synergies with greater than $75 million of those expected to be realized in the first full quarter of combined operations. Microsemi currently estimates approximately $0.60 of non-GAAP EPS accretion in the first full year after closing the transaction.

Microsemi intends to fund the transaction and repay its existing credit facility with existing cash, $2.7 billion in new transaction debt and $0.6 billion in Microsemi common stock. Shareholders of Microsemi and PMC will own approximately 85 percent and 15 percent, respectively, of the combined entity post completion of the transaction.

Under the terms of the definitive acquisition agreement, a wholly-owned subsidiary of Microsemi will commence an exchange offer to acquire all of the outstanding shares of PMC common stock for $9.22 in cash and 0.0771 of a share of Microsemi common stock for each share of PMC common stock tendered. Upon satisfaction of the conditions to the exchange offer, and after the shares tendered in the exchange offer are accepted for payment, the agreement provides for the parties to effect, as promptly as practicable, a merger, which would not require a vote of PMC's stockholders, and which would result in each share of PMC common stock not tendered in the exchange offer being converted into the right to receive $9.22 in cash and 0.0771 of a share of Microsemi common stock. The exchange offer is subject to customary conditions, including the tender of at least a majority of the outstanding shares of PMC's common stock and certain regulatory approvals, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in the first quarter of calendar 2016. No approval of the stockholders of Microsemi is required in connection with the proposed transaction. Terms of the agreement were approved by the boards of directors of both Microsemi and PMC.

Stifel is acting as exclusive financial adviser to Microsemi, along with O'Melveny & Myers LLP which is serving as legal adviser. Morgan Stanley Senior Funding, Inc. is providing committed financing for the transaction to Microsemi.

Qatalyst Partners LP and Needham & Company, LLC are acting as financial advisors to PMC and Skadden, Arps, Slate, Meagher & Flom LLP is acting as PMC's legal advisor.

For more details, visit:
http://www.pmcs.com
http://www.microsemi.com

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