Microchip Technology Q4 Profit Tops Estimate; To Buy Micrel

(RTTNews) - Microchip Technology Inc. (MCHP) reported net income for the fourth quarter of $99.4 million or $0.45 per share, compared to $111.5 million or $0.50 per share for the year-ago quarter.

Excluding items, adjusted net income for the fourth quarter was $148.8 million or $0.68 per share, compared to $141.3 million or $0.64 per share in the prior year quarter.

Net sales for the fourth quarter rose 10.1% to $543.2 million from $493.4 million a year ago, while adjusted net sales increased 10.9% to $547.2 million from $493.4 million last year.

Analysts polled by Thomson Reuters expected the company to earn $0.67 per share on revenue of $546.07 million for the fourth quarter. Analysts' estimates typically exclude special items.

Additionally, Microchip said that it has agreed to buy Micrel Inc. (MCRL) for $14.00 per share. The acquisition price represents a total equity value of about $839 million, and a total enterprise value of about $744 million, after excluding Micrel's cash and investments on its balance sheet of about $95 million.

Micrel shareholders may elect to receive the purchase price in either cash or shares of Microchip common stock.

The acquisition is expected to close early in the third quarter of calendar 2015.

The company also said its Board of Directors has authorized an increase in the existing share repurchase program to 20.0 million shares of common stock from the about 2.5 million shares remaining under the prior authorization.

Under the program, in the next several months, Microchip plans to repurchase the approximate number of shares it issues in the Micrel acquisition, which is expected to result in the dealn having the accretive effects of a cash transaction from a financial perspective. The acquisition is expected to be mildly dilutive to Microchip's adjusted earnings per share immediately after the close, but is expected to be accretive in the first full quarter after completion of the repurchase of the number of shares issued in the deal.

Looking forward to the first quarter, Microchip forecasts net sales of $547 to $564 million, earnings of 49 to 52 cents per share and adjusted earnings of 69 to 73 cents. Analysts currently expect the company to earn $0.73 per share on revenue of $568.34 million for the first quarter.