Microsemi supplies analogue and mixed-signal integrated circuits and semiconductors to the aerospace and defence, communications, data centre and industrial sectors. The outfit has been growing itself in the last couple of years with a wave of acquisitions, and said it wants to expand further in aerospace and defence.

Microchip currently gets about two percent of its annual sales from the aerospace and defence markets. The deal would also strengthen Microchip’s base in the computing and communications sectors, which together accounted for less than 15 percent of its full-year sales.

The transaction includes a $68.78 per share cash offer, representing a premium of about seven percent to Microsemi’s closing price on Thursday.

Microchip said the deal, which is expected to close in the second quarter of 2018, would immediately add to its adjusted earnings per share. The chipmaker expects an estimated savings of $300 million in the third year after the deal closes.