Microsemi Corp, a US-based maker of microchips for the aerospace and defence industries, yesterday launched a hostile $548.7 million cash bid for rival Zarlink Semiconductor, after the Canadian company rejected its two earlier offers.

Microsemi went public with its bid after the board of Ottawa-based Zarlink refused to hold private negotiations with it on both occasions.

Irvine, California-based Microsemi's cash offer is C$3.35 ($3.54) a share, a premium of 40 per cent to Zarlink's closing price of C$2.39 on 20 July.

Microsemi first approached Zarlink in January with an offer of C$3.00 per share, which  Zarlink rejected  and later again rebuffed without discussion the raised C$3.25-C$3.55-a-share bid.

Microsemi said it reduced its bid ''due to the added costs associated with pursing this transaction in a public manner and the inability for Microsemi to perform diligence.''

Zarlink stuck to its earlier stance and refused to budge saying that the latest offer still undervalued the company.

The company ''unanimously concluded and advised Microsemi that the proposals significantly undervalued Zarlink and its future prospects and were not in the best interests of its stakeholders.''

Zarlink said that the latest proposal does not change the view of the board, which ''unanimously concluded with the assistance of its advisers that it significantly undervalues the company.''

Zarlink, whose clients include Alcatel-Lucent, Cisco Systems and Juniper Networks among others, designs mixed-signal semiconductor products for a range of communications and medical applications.

Zarlink makes more than 900 active products, and ships around 100 million chips per year generating around 80 per cent of its $230-million revenue from the communications industry and about 13 per cent from the medical industry.

Microsemi, which has made 14 acquisitions worth $1.1 billion over the past five years, including four last year and two so far this year, is a designer and manufacturer of high performance analog and mixed-signal integrated circuits, high reliability semiconductors and RF sub-systems.

The company's semiconductors manage and control or regulate power, protect against transient voltage spikes and transmit, receive and amplify signals.

Microsemi's products include individual components as well as integrated circuit solutions that enhance customer designs by improving performance and reliability, battery optimisation as also by reducing size or protecting circuits.

The company's principal markets include applications for implanted medical, defence and aerospace and satellite, notebook computers, monitors and LCD TVs, automotive and mobile connectivity.

The company, which has manufacturing facilities in California, Arizona, Massachusetts, Oregon, Ireland, and Shanghai, is seeking to expand its presence in the communications and medical sector.

It had posted net income of $59.038 million on revenues of $518.268 million last year.

Some of its major customers include Honeywell, GE, HP, Raytheon, Dell, LG, Lockheed, Boeing, Boston Scientific, Medtronic, St. Jude Medical, Sony, Cisco Systems, Samsung and others.