Robbins Arroyo LLP: Acquisition of Applied Micro Circuits Corporation (AMCC) by MACOM Technology Solutions Holdings, Inc. (MTSI) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Applied Micro Circuits Corporation (NASDAQGS: AMCC) by MACOM Technology Solutions Holdings, Inc. (NASDAQGS: MTSI). On November 21, 2016, the two companies announced the signing of a definitive merger agreement pursuant to which MACOM will acquire Applied Micro Circuits. Under the terms of the agreement, Applied Micro Circuits shareholders will receive $3.25 in cash and 0.1089 shares of MACOM common stock for each share of Applied Micro Circuits common stock, with a combined value equal to $8.40.
Is the Proposed Acquisition Best for Applied Micro Circuits and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Applied Micro Circuits is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $8.40 merger consideration represents a premium of only 13.40% based on Applied Micro Circuits’ seven-day average closing price for the period ending November 18, 2016. This premium is significantly below the average one week premium of nearly 32.30% for comparable transactions within the past five years. Further, the $8.40 merger consideration is significantly below the target price of $11.00 set by an analyst at Drexel Hamilton LLC on November 16, 2015, the target price of $10.00 set by an analyst at Canaccord Genuity on April 28, 2015, and the target price of $9.00 set by an analyst at Raymond James on July 28, 2016. In the last three years, Applied Micro Circuits traded as high as $13.48 on December 31, 2013, and most recently traded above the merger consideration – at $8.45 – on September 4, 2014.
On October 27, 2016, Applied Micro Circuits reported strong earnings results for its second quarter 2017. Applied Micro Circuits reported revenue of $41.8 million for the three months ended September 30, 2016, a 5.12% increase from the same period of the prior year. Applied Micro Circuits has also beaten analyst estimates for revenue and adjusted net income in three of the past four consecutive quarters. In commenting on these results, Applied Micro Circuits President and Chief Executive Officer Paramesh Gopi remarked, “In the second quarter of fiscal 2017 we achieved our seventh consecutive quarter of revenue growth. Our Connectivity business once again drove the improvement in top line results, and higher gross margins combined with greater operating efficiencies led to a return to profitability on a non-GAAP basis.”
In light of these facts, Robbins Arroyo LLP is examining Applied Micro Circuits’ board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Applied Micro Circuits shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Applied Micro Circuits shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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