MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
On April 24, 2019, MACOM Technology Solutions Holdings, Inc. (the Company), MACOM Wireless Cayman Limited (MACOM Cayman) and MACOM Wireless (HK) Limited (the MACOM HK), both wholly-owned, indirect subsidiaries of the Company, entered into a share purchase agreement (the Share Purchase Agreement) with Goertek (HongKong) Co., Limited (Goertek), to which MACOM Cayman and Goertek will form, upon closing of the Transaction (as defined below), a joint venture (the JV) for purposes of supplying, marketing and distributing Gallium-Nitride (GaN)-on-Silicon-based RF Power components into Chinas 5G basestation market.
The Company had previously, through MACOM Cayman, provided to MACOM HK a non-exclusive license (the License Agreement) to certain of its intellectual property rights to enable MACOM HK to conduct the proposed business of the JV, in exchange for sales-based royalties. In connection with the entry into the Share Purchase Agreement, the parties also negotiated certain modifications to the License Agreement to a side agreement (the Side Agreement) to be effective at the closing of the Transaction. The Company will retain rights vis–vis the JV with respect to GaN-on-Silicon products outside of the China market.
Upon the terms and subject to the conditions set forth in the Share Purchase Agreement, MACOM Cayman will sell to Goertek 51% of the issued ordinary shares of MACOM HK owned by MACOM Cayman in exchange for total consideration of up to $134.6 million, including $30.0 million at closing and up to $95.0 million in potential milestone payments plus accrued interest thereon (the Transaction). MACOM Cayman will retain a 49% equity interest in MACOM HK. Furthermore, each of the Company and Goertek shall loan MACOM HK $25.0 million, to and subject to the conditions set forth in the Share Purchase Agreement, to be used by MACOM HK for general corporate purposes. Under the Share Purchase Agreement, the Company has agreed to guarantee the obligations of MACOM Cayman thereunder. The Company expects the Transaction to close in the second half of calendar 2019, subject to certain closing conditions, including the receipt of anti-trust approval from Chinas State Administration for Market Regulation.
At the closing of the Transaction, MACOM Cayman and Goertek have agreed to enter into a members agreement and to amend and restate the articles of association of MACOM HK, which will govern the operation and management of MACOM HK, as well as various other ancillary agreements, to which the Company, or affiliates thereof, will be entitled to royalties and distributions from the JV, which are expected to provide the Company with up to 60% of the economic value over time created by the JV, depending on the JVs financial performance.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the complete texts of the Share Purchase Agreement, the License Agreement and the Side Agreement, copies of which the Company intends to file with the U.S. Securities and Exchange Commission as exhibits to its Quarterly Report on Form 10-Q for the quarter ended June 28, 2019.
This Current Report on Form 8-K contains forward-looking statements related to the Company, its affiliates and transactions described herein that involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements in this Current Report on Form 8-K include, among other things, statements about the potential consideration, timing, costs and benefits associated with the proposed JV transaction. Risks and uncertainties include, among other things, the risks related to the satisfaction of the conditions to closing the JV transaction on the anticipated timeframe or at all, the risks related to the ability of the JV to realize the anticipated benefits of the transaction in Chinas 5G basestation market, the JVs ability to successfully supply, market and distribute its products and other business effects, including the effects of industry, market, economic, political or regulatory conditions, as well as other risks described in the Companys Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings with the U.S. Securities and Exchange Commission and available at www.sec.gov. The information contained in this Current Report on Form 8-K is as of its filing date, and the Company assumes no obligation to update forward-looking statements contained in this document as the result of new information or future events or developments.
Item 2.02. Results of Operations and Financial Condition.
On April 24, 2019, the Company issued a press release announcing preliminary results of operations for the fiscal second quarter ended March 29, 2019. A copy of the press release is furnished as Exhibit 99.1 to this this Current Report on Form 8-K.
Item 7.01. Regulation FD Disclosure.
On April 24, 2019, the Company issued a press release announcing the joint venture with Goertek. A copy of the press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
MACOM Technology Solutions Holdings, Inc. Exhibit
EX-99.1 2 ex991_guidancexq2fy19.htm EXHIBIT 99.1 Exhibit MACOM Reports Preliminary Fiscal Second Quarter 2019 Non-GAAP Financial Results Complete Fiscal Second Quarter Financial Results to be Announced on May 7,…
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About MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI)
MACOM Technology Solutions Holdings, Inc. is a provider of high-performance analog semiconductor solutions that enable Internet applications, the cloud-connected applications economy, and the networked battlefield across the radio frequency (RF), microwave, millimeterwave and photonic spectrum. It has multiple design centers, silicon, gallium arsenide and indium phosphide fabrication, manufacturing, assembly and test, and operational facilities throughout North America, Europe, Asia and Australia. It also offers foundry services. It offered a portfolio of over 4,500 standard and custom devices, which include integrated circuits, multi-chip modules, power pallets and transistors, diodes, amplifiers, switches and switch limiters, passive and active components and complete subsystems, across more than 40 product lines serving three primary markets, as of September 30, 2016. The Company’s products are RF Power Products, Optoelectronics and Photonic Solutions, among others.
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