MACOM Technology Solutions (MTSI) announced it has entered into a definitive agreement to acquire Applied Micro Circuits (AMCC) for approximately $8.36 per share, consisting of $3.25 in cash and 0.1089 MACOM shares per share of AppliedMicro. This price for each share of AppliedMicro represented a 15.4% premium over the company's closing price of $7.25 on Friday, November 18. MACOM intends to divest the well-positioned but non-strategic Compute business within the first 100 days of closing, the company said.

The transaction is valued at approximately $770M for AppliedMicro's approximately $165M in TTM revenue, including the Compute business, and $82M of cash and short-term investments at September 30. Excluding the Compute business, MACOM expects this transaction to be accretive to its non-GAAP gross margin, non-GAAP operating margin and non-GAAP EPS, in MACOM's fiscal year ending September, 2017. MACOM expects to benefit from over $600M of tax net operating loss carry forwards, it added. AppliedMicro stockholders are expected to own approximately 15% of the combined company on a pro forma basis. MACOM expects to pay the cash portion of the acquisition price from cash on hand.

The boards of directors of both companies have approved the transaction, which is subject to customary closing conditions and regulatory approvals. MACOM currently expects the transaction to close in the first calendar quarter of 2017.