NEW YORK (TheStreet) -- Shares of Supertex (SUPX) exploded on Monday after Microchip Technology (MCHP) announced it would purchase the semiconductor company for $394 million in cash, or $33 a share. The offer represents a 35% premium to Friday's close of $24.38.
By early afternoon, Supertex had soared 35.3% to $32.99, while Microchip was up 0.59% to $44.70. Supertex trading volume of 1.5 million was 34 times its three-month average daily volume.
The acquisition is expected to be accretive to Microchip's non-GAAP net income in the first full quarter after the transaction has been completed. The acquisition is expected to close in the second quarter of 2014, subject to shareholder and regulatory approval.
"Supertex's deep domain knowledge in high voltage analog and mixed signal technologies, and strong position in the Medical, Industrial and Lighting markets, complement many of Microchip initiatives in these areas. We believe that combining Supertex's business with Microchip's Analog business will enable significant synergies and cross-selling opportunities," said Microchip CEO Steve Sanghi in a statement.
Microchip Technology specializes in microcontrollers and on-board Flash, or reprogrammable, memory technology.
TheStreet Ratings team rates SUPERTEX INC as a Buy with a ratings score of B. The team has this to say about their recommendation:
"We rate SUPERTEX INC (SUPX) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, compelling growth in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."