(Reuters) - Chipmaker Microsemi Corp MSCC.O said on Tuesday it would buy rival PMC-Sierra Inc PMCS.O in a $2.5 billion deal, a day after Skyworks Solutions Inc (SWKS.O) walked away from a bidding war.
Microsemi, which makes chip equipment and provides software for cloud data, is looking to expand its offerings for telecom, data center and cloud customers through the acquisition of PMC-Sierra.
Chipmakers have been buying up each other at a record pace this year due to rising costs, demand for cheaper chips and the need to diversify in the wake of new technologies.
Skyworks, a supplier of radio frequency chips to companies such as Apple Inc (AAPL.O), on Oct. 5 offered to buy PMC-Sierra in a $2 billion deal.
Microsemi launched a rival bid on Oct. 19, and since then the companies have raised their respective offers.
Skyworks said late on Monday that it would not pursue PMC-Sierra as the company no longer met its financial criteria at an increased valuation.
Skyworks said it will receive an $88.5 million termination fee from PMC-Sierra.
The terms of Microsemi’s offer made on Tuesday are the same as last week’s — $9.22 in cash and 0.0771 in stock.
The deal, approved by Microsemi and PMC-Sierra boards, does not require the approval of Microsemi shareholders, the companies said.
Microsemi’s shares fell about 2 percent to $35.52 in premarket trading. PMC-Sierra’s shares were down 1.5 percent at $11.68, while Skyworks’ stock was up marginally $78.
Reporting by Devika Krishna Kumar in Bengaluru; Editing by Kirti Pandey