Microsemi Corp. said Tuesday it had reached a deal to buy chip maker PMC-Sierra Inc. for $2.5 billion in cash and stock, ending weeks of dueling negotiations with Skyworks Solutions Inc.

Skyworks said PMC terminated its merger agreement after Skyworks decided not to modify its latest offer. Skyworks also said it was entitled to an $88.5 million termination fee from PMC.

Microsemi will acquire PMC for its previously announced offer of $9.22 in cash and 0.0771 of a share of Microsemi common stock for each share of PMC common stock. The transaction represents a 77.4% premium to PMC's Sept. 30. closing price, the day before it was reported PMC could be seeking a buyer, and a 1.3% premium to the closing price Monday.

Microsemi Chief Executive James Peterson reiterated the acquisition will provide Microsemi with a leading position in high performance and scalable storage solutions, while also adding a complementary portfolio of high-value communications products.

"As we integrate the team and drive profitability, our combined company will benefit from increased scale, industry-leading margins, diversified market exposure, consolidated infrastructure and substantial cost savings," he said.

Last week, Microsemi Corp. again sweetened its proposal to acquire PMC after PMC's board chose not to recommend the semiconductor company's most recent offer despite being dubbed "superior" to rival Skyworks' bid.

Microsemi proposed to acquire PMC for $2.3 billion in cash and stock, compared with Skyworks' all-cash $2.24 billion deal.

Skyworks in turn didn't make another bid.

"Skyworks maintains a highly disciplined approach to the assessment of potential acquisition candidates, and at an increased valuation, PMC no longer meets Skyworks' financial criteria," the company said while announcing the agreement termination.

Write to Anne Steele at Anne.Steele@wsj.com

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(END) Dow Jones Newswires

November 24, 2015 08:35 ET (13:35 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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