Microchip Technology leverage up to 4.7x after Microsemi purchase

By Devika Patel

Knoxville, Tenn., June 4 – Microchip Technology Inc. expects its net leverage will be 4.7x by the end of June due to its recent acquisition of Microsemi Corp. but the company expects to bring the leverage down by one turn each year.

“We closed the Microsemi acquisition last Tuesday,” president and chief operating officer Ganesh Moorthy said at the Second Annual Needham Automotive Tech Day in New York on Monday.

“The aggregate borrowing was $8.45 billion at a blended interest rate of just over 4% and that takes us to a net leverage of 4.7x by the end of June, excluding some very long-term debt that we have, it’s 2037 denominated, and we expect we’ll bring that leverage down about one turn every 12 months or so,” he said.

Microchip completed its acquisition of Microsemi on May 29.

Microsemi shareholders received $68.78 per share in cash for each Microsemi common share.

Microchip financed the transaction with cash from the combined companies’ balance sheets, borrowings from Microchip’s existing line of credit, $3 billion from a new term loan and $2 billion from newly issued high-grade secured bonds.

Microsemi’s previously outstanding debt was retired in conjunction with the closing of the transaction.

Microchip Technology is a Chandler, Ariz., manufacturer of microcontroller, memory and analog semiconductors.

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