MACOM Announces Definitive Agreement to Acquire Mindspeed Technologies
MACOM expects Non-GAAP EPS accretion between $0.15 and $0.20 in fiscal 2014
and between $0.25 and $0.30 in fiscal 2015
Mindspeed intends to sell its wireless business before closing
LOWELL, Mass., Nov. 5, 2013 (GLOBE NEWSWIRE) -- M/A-COM Technology Solutions
Holdings, Inc. (Nasdaq:MTSI) (MACOM), a leading supplier of high performance
RF, microwave, and millimeter wave products, today announced it has entered
into a definitive agreement to acquire Mindspeed Technologies, Inc.
(Nasdaq:MSPD) (Mindspeed), a leading supplier of semiconductor solutions for
communications infrastructure applications, for $5.05 per share in a cash
Mindspeed is also in advanced discussions with a potential strategic buyer for
its wireless business, which it intends to sell prior to closing of the MACOM
Highlights of the transaction include:
*The companies' combined trailing twelve months (TTM) revenue is
approximately $451 million with non-GAAP gross margin of approximately
50%, excluding Mindspeed's wireless business.
*Cash transaction valued at $272 million for Mindspeed's $132 million in
TTM revenue (excluding wireless business and non-recurring revenue from
sales of intellectual property) and $26 million of cash and cash
equivalents at September 27, 2013.
*MACOM expects substantial annual synergies from reduction in corporate
overhead, corporate R&D overhead, SG&A and exiting underperforming
*Expected to be immediately accretive to MACOM's non-GAAP earnings per
share with expected non-GAAP EPS accretion between $0.15 and $0.20 per
share in fiscal 2014 and between $0.25 and $0.30 per share in fiscal 2015.
*Positions MACOM to be a global leader in 100G optical networking and
expands MACOM's addressable market, moving from long-haul to data centers
and metro markets.
*Complements MACOM's current product offerings with a high performance
analog (HPA) portfolio of low latency crosspoint switches, integrated
optical physical media devices (PMDs) and low power signal conditioners.
*Diversifies MACOM's served markets to include Enterprise applications.
*Expands MACOM's addressable RF and Microwave market with the addition of
high performance Silicon Germanium (SiGe) capability.
*Complements MACOM's strong U.S. presence with a broadened customer
footprint and strong sales channel in the Asia Pacific region.
Commenting on the transaction, John Croteau, President and Chief Executive
Officer, stated, "This acquisition will position MACOM as a leading global
provider of 100G optical solutions which underscores our growth strategy in
commercial communications markets. Our interest in Mindspeed is the company's
high-growth, high-margin HPA business as well as its cash-generating VoIP
business. The addition of the HPA portfolio, which consists of the world's
fastest crosspoint switches, ultra low power signal conditioners and
industry-leading optical PMDs, aligns well with MACOM's business model --
offering non-GAAP gross margins approaching 70%, long product life cycles, and
sticky customer relationships."
Mindspeed also has a communications processor business, which currently does
not align with MACOM's long-term strategic focus, and therefore additional
options will be explored while continuing to support its customers.
Separately, in the event Mindspeed's wireless business is not sold, it will be
restructured and wound down while continuing to support its customers.
Mr. Croteau added, "Mindspeed's leadership in SiGe-based products, along with
its long-held position in enterprise video and metro markets, complements our
strong position in long-haul modulator drivers based on Indium Phosphide (InP)
and Gallium Arsenide (GaAs) technology. This will position MACOM as a clear
leader across all 100G segments, all physical layer products, and all
requisite technologies enabling us to capitalize on the expected decade-long
build out of the 100G optical market."
"This acquisition will diversify our served markets to include enterprise
applications, while also enabling MACOM to strengthen our core RF and
Microwave position with SiGe technology," continued Mr. Croteau. "The
transaction will also broaden our customer footprint and reach, by leveraging
Mindspeed's strong sales channel in Asia, which complements our strength in
North America and other regions."
MACOM estimates that the acquisition will result in substantial synergies from
corporate overhead, SG&A, and exit from underperforming businesses. MACOM also
expects that the acquisition will be accretive to non-GAAP earnings per share
between $0.15 and $0.20 in fiscal 2014 and between $0.25 and $0.30 in fiscal
MACOM intends to commence a tender offer to purchase each outstanding common
share of Mindspeed for $5.05 in cash, without interest, and MACOM will assume
certain equity awards held by Mindspeed employees. The transaction value is
approximately $272 million in diluted equity value, or $246 million net of
Mindspeed's cash position of approximately $26 million as of September 27,
2013. MACOM expects to finance the acquisition through a combination of cash
on hand and its existing undrawn revolving credit facility. The boards of both
companies have approved the transaction, which is subject to customary closing
conditions and regulatory approvals. MACOM currently expects the transaction
to close by the end of calendar 2013.
Barclays acted as exclusive financial advisor and Perkins Coie LLP acted as
legal counsel to MACOM.
Conference Call and Slide Presentation Information
MACOM will host a conference call on Tuesday, November 5 at 5:00 p.m. Eastern
Time (2:00 p.m. Pacific Time) in conjunction with its fourth quarter and
fiscal 2013 earnings conference call. The conference call will be broadcast
live over the Internet with a slide presentation and can be accessed by all
interested parties on the Investor section of MACOM's website at
http://ir.macomtech.com/. On the call John Croteau, MACOM's President and
Chief Executive Officer, and Conrad Gagnon, MACOM's Chief Financial Officer,
will discuss the proposed acquisition. Investors and analysts are invited to
participate on the call. To listen to the live call, please go to the Investor
section of MACOM's website and click on the Conference Call link at least
fifteen minutes prior to the start of the call to register, download, and
install any necessary audio software.
When: Tuesday, November 5, 2013
Time: 5:00 p.m. Eastern Time
Dial in: 1-877-837-3908; outside the U.S. +1-973-872-3000
Participant Code: 91211532
Live Webcast: http://ir.macomtech.com/
For those unable to participate during the live broadcast, a replay will be
available shortly after the call and will be available on MACOM's website for
7 days. The replay dial-in number is 1-855-859-2056, and the pass code is
91211532. International callers should dial +1-404-537-3406 and enter the same
pass code at the prompt. Additionally, the conference call will be broadcast
live over the Internet and can be accessed by all interested parties for
approximately 60 days in the Investor Relations section of the Company's
website at http://ir.macomtech.com/
Further details of the transaction are set out in MACOM's Current Report on
Form 8-K filed with the Securities and Exchange Commission on November 5,
M/A-COM Technology Solutions Holdings, Inc. (www.macomtech.com) is a leading
supplier of high performance RF, microwave, and millimeter wave products that
enablenext-generation internet and modern battlefield applications.
Recognized for its broad catalog portfolio of technologies and products,
MACOMserves diverse markets, including CATV, wireless and optical
communicationsinfrastructure, satellite, radar, automotive, industrial,
medical, andmobile devices.A pillar of the RF and microwave industry, we
thrive on more than 60 years of solving our customers' most complex problems.
Headquartered in Lowell, Massachusetts, MACOM is certified to the ISO9001
international quality standard and ISO14001 environmental management standard.
MACOM has design centers and sales offices throughout North America, Europe,
Asia and Australia.
MACOM, M/A-COM, M/A-COM Technology Solutions, M/A-COM Tech, Partners in RF &
Microwave, The First Name in Microwave and related logos are trademarks of
MACOM. All other trademarks are the property of their respective owners.
About Mindspeed Technologies
Mindspeed Technologies, Inc. (Nasdaq:MSPD) is a leading provider of network
infrastructure semiconductor solutions to the communications industry.The
company's low-power system-on-chip (SoC) products are helping to drive video,
voice and data applications in worldwide fiber-optic networks and enable
advanced processing for 3G and long-term evolution (LTE) mobile networks.The
company's high-performance analog products are used in a variety of optical,
enterprise, industrial and video transport systems.Mindspeed's products are
sold to original equipment manufacturers (OEMs) around the globe.
Special Note Regarding Forward-Looking Statements
This press release contains forward-looking statements based on MACOM
management's beliefs and assumptions and on information currently available to
our management. Forward-looking statements include, among others, statements
concerning the Mindspeed transaction, including those regarding the potential
date of closing of the acquisition, and any potential benefits and synergies,
strategic plans, divestitures, restructuring, cost savings, accretion, and
financial and business expectations associated with the acquisition, as well
as any other statements regarding MACOM's plans, beliefs or expectations
regarding the transaction or its future business or financial results.
Forward-looking statements include all statements that are not historical
facts and generally may be identified by terms such as "anticipates,"
"believes," "could," "estimates," "expects," "intends," "may," "plans,"
"potential," "predicts," "projects," "seeks," "should," "will," "would" or
similar expressions and the negatives of those terms.
Forward-looking statements contained in this press release reflect MACOM's
current views about future events and are subject to risks, uncertainties,
assumptions and changes in circumstances that may cause those events or our
actual activities or results to differ materially from those expressed in any
forward-looking statement. Although MACOM believes that the expectations
reflected in the forward-looking statements are reasonable, it cannot and does
not guarantee future events, results, actions, levels of activity, performance
or achievements, including the successful closing of the Mindspeed transaction
or successful execution of any other divestment or restructuring plans
described in this press release. Readers are cautioned not to place undue
reliance on these forward-looking statements. A number of important factors
could cause actual results to differ materially from those indicated by the
forward-looking statements, including, among others, costs associated with the
merger, tender offer and financing of the Mindspeed transaction; the
unsuccessful completion of the tender offer; matters arising in connection
with the parties' efforts to comply with and satisfy applicable regulatory
approvals and closing conditions relating to the transaction, delays in or
inability to complete anticipated divestiture and restructuring activities,
failure to achieve expected synergies and other anticipated benefits of the
transaction, the potential for weakness or less than expected strength in our
catalog business, continued weakness in our Networks market, lower than
expected demand in any or all of our four primary end markets or from any of
our large OEM customers based on macro-economic weakness or otherwise, the
potential for defense spending cuts, program delays, cancellations or
sequestration, failures or delays by customers in winning business or to make
purchases from us in support of such business, lack of adoption or delayed
adoption by customers and industries we serve of GaN or other solutions
offered by us, failures or delays in porting and qualifying GaN process
technology to our Lowell, MA fabrication facility,lower than expected
utilization and absorption in our manufacturing facilities, lack of success or
slower than expected success in our new product development efforts, loss of
business due to competitive factors, product or technology obsolescence,
customer program shifts or otherwise, lower than anticipated or slower than
expected customer acceptance of our new product introductions, the potential
for a shift in the mix of products sold in any period toward lower-margin
products or a shift in the geographical mix of our revenues, the potential for
increased pricing pressure based on competitive factors, technology shifts or
otherwise, the impact of any executed or abandoned acquisition, divestiture or
restructuring activity, the impact of supply shortages or other disruptions in
our internal or outsourced supply chain, the relative success of our
cost-savings initiatives, the potential for inventory obsolescence and related
write-offs, the expense, business disruption or other impact of any current or
future investigations, administrative actions, litigationor enforcement
proceedings we may be involved in, and the impact of any claims of
intellectual property infringement or misappropriation, which could require us
to pay substantial damages for infringement, expend significant resources in
prosecuting or defending such matters or developing non-infringing technology,
incur material liability for royalty or license payments, or prevent us from
selling certain of our products, as well as those factors described in "Risk
Factors" in MACOM's filings with the Securities and Exchange Commission (SEC),
including its Quarterly Report on Form 10-Q for the quarter ended June 28,
2013 as filed with the SEC on August 5, 2013.MACOM undertakes no obligation
to publicly update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.
Notice to Investors
The tender offer for the outstanding shares of common stock of Mindspeed
described in this communication has not yet commenced. This press release is
for informational purposes only and is not an offer to purchase any shares of
Mindspeed or a solicitation of an offer to sell securities. At the time the
tender offer is commenced, MACOM will file a tender offer statement on
Schedule TO, including an offer to purchase, a letter of transmittal and
related documents, with the United States Securities and Exchange Commission
(the "SEC") and Mindspeed will file a solicitation/recommendation statement on
Schedule 14D-9 with the SEC. The tender offer statement (including an offer to
purchase, a related letter of transmittal and other offer documents) and the
solicitation/recommendation statement will contain important information that
should be read carefully before any decision is made with respect to the
tender offer.Such materials will be made available to Mindspeed stockholders
at no expense to them. In addition, such materials (and all other offer
documents filed with the SEC) will be available at no charge on the SEC's
website at www.sec.gov.
CONTACT: Company Contact:
M/A-COM Technology Solutions Holdings, Inc.
Chief Financial Officer
Investor Relations Contact:
Leanne K. Sievers
EVP, Investor Relations
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