Actel-Microsemi: Is It Rational?
So what’s with Actel-Microsemi?
Here in Silicon Valley this week I found a lot of people were wondering why Microsemi, a military supplier, would want Actel.
First reason was Microsemi got it cheap. Purchase price for Actel’s $200 million of annual revenues was $430 million net of Actel’s $160 million cash. The per share acquisition price of about $21 compares favourably to the pre-bid share price of about $16.
Second, Actel has anti-fuse – a good technology for robust, high-spec, rad-hard parts wanted by the military - but a technology which Actel has not developed for some years.
Third, Actel has rad-hard, military qualified, high-spec, flash-based FPGAs. The flash parts also sell into the industrial market. This will be good margin business and Actel has just finished development of an industry-leading 65nm embedded flash process with UMC which gives this business plenty of future head-room.
Fourth, Actel has flash-based consumer-oriented FPGAs like Igloo. Here it competes with Xilinx, Altera and others.
It can be assumed that Microsemi would find value in 1,2 and 3 but maybe not so much in 4.
Many were bemused by the conference call which gave the impression that Microsemi were confused about their intentions for the Actel product lines.
What will Microsemi do with the flash-based consumer parts? It’s unclear.
The Microsemi CEO won’t be the first CEO to have made an acquisition while being fuzzy on the reasons for it.
Sitting with a group of Altera guys it was natural to ask if they might buy the flash-based consumer FPGA line off Microsemi if it’s for sale. Their faces immediately went into poker mode. Lips were well and truly sealed.
For the programmable logic industry as a whole it will probably be quietly satisfying to see a rival taken over by an acquirer which lacks a clear strategy for the acquisition.
Tags: actel, altera, conference call, good technology, poker