O.C.'s Microsemi Corp. to Buy BKC Semiconductors
Semiconductor supplier Microsemi Corp. said Wednesday that it has agreed to buy one of its biggest competitors, BKC Semiconductors Inc., for about $13.4 million.
Microsemi said it plans to pay $9.17 a share--more than $3 above BKC’s current price. BKC has about 1.3 million outstanding shares, and employees have options to buy another 200,000 shares.
“We are paying more for the stock because we think the stock is undervalued,” said David R. Sonksen, Microsemi’s chief financial officer. “The value of BKC is worth more than the trading price of the stock.”
Microsemi derives more than half of its business from the aerospace industry. Its diodes control the flow of electricity in satellites and other space equipment. Analysts say Microsemi controls some 80% of this market, and BKC is one of its few competitors.
“This acquisition took out the only real competition. Now they pretty much dominate that market,” said J.D. Abouchar, senior technology analyst at Preferred Capital Markets, who rates Microsemi stock a “strong buy.”
He said diodes have a profit margin of 27% in the aerospace field, compared with 15% to 20% in other fields.
Sonksen said the company plans to retain Lawrence, Mass.-based BKC’s 120 employees. BKC will operate as a stand-alone subsidiary.
The planned acquisition was announced after the market closed Wednesday. BKC’s stock rose 38 cents, closing at $5.88 a share.
The deal is expected to close by April, Sonksen said.
Santa Ana-based Microsemi also reported Wednesday that net income for the first quarter rose 63% to $3.1 million, or 28 cents a share, from the $1.9 million, or 19 cents a share, for the same period a year ago. Revenue for the quarter ended Dec. 28 increased 23% to $44.1 million from $35.8 million.
BKC said it earned $188,000, or 15 cents a share, for the first quarter ended Dec. 31, on revenue of $3.10 million.