MaxLinear to Acquire Exar in All-Cash Transaction
CARLSBAD, CA and FREMONT, CA – March 29, 2017 – MaxLinear, Inc. (NYSE: MXL), a leading provider of integrated radio frequency and mixed-signal integrated circuits for the connected home and wired and wireless infrastructure markets, and Exar Corporation (NYSE: EXAR), a designer and developer of high performance analog mixed-signal ICs and sub-system solutions, announced today that they have entered into a definitive agreement under which MaxLinear has agreed to acquire Exar for $13.00 per share in cash. This price for each share of Exar represents a 22% premium over the Company’s closing price of $10.62 on Tuesday, March 28. The total value is approximately $700 million, or $472 million net of Exar’s cash acquired. MaxLinear intends to fund the transaction with cash from the combined balance sheets and a $425 million term loan. The transaction will be conducted by means of a tender offer and is expected to close in the second quarter of 2017, subject to customary closing conditions and U.S. regulatory approvals.
The acquisition significantly furthers MaxLinear’s strategic goals of increasing revenue scale, diversifying revenues by end customers and addressable markets, and expanding its analog and mixed-signal footprint on existing tier-1 customer platforms. Exar adds a diverse portfolio of high performance analog and mixed-signal products constituting power management and interface technologies that are ubiquitous functions in wireless and wireline communications infrastructure, broadband access, industrial, enterprise networking, and automotive platforms. MaxLinear intends to leverage combined technological expertise, cross-selling opportunities and distribution channels to significantly expand its serviceable addressable market (“SAM”).
“We are very excited about the combination of these two complementary organizations as we expand our capabilities, reach, and value proposition to our customers,” said Dr. Kishore Seendripu, CEO of MaxLinear. “Exar’s expertise in power management and interface technologies, along with an extensive distribution platform, should enable us to accelerate our growth, capitalize on cross-selling opportunities and better serve our customers. Our successful M&A track record is a testament to our careful and thoughtful approach to acquisition integration, and we expect the same with Exar. The increased scale and related financial benefits of the transaction should result in immediate non-GAAP EPS accretion and increased free cash flow.”
Ryan Benton, CEO of Exar, commented, “I am excited about the prospects for the combination of MaxLinear and Exar. Based on my extensive interactions with Kishore and his team, I am confident that Exar’s customers and employees will benefit significantly from the enhanced R&D scale, technology breadth, and market leadership of the combined organization. MaxLinear’s commitment to and its proven track record of providing its customers with innovative and differentiated high performance analog, mixed-signal and RF technology will present exciting new opportunities for our employees, customers and supply chain. My team and I look forward to working with the MaxLinear team towards the successful integration of our companies.”
Following consummation, the transaction is expected to be immediately accretive to MaxLinear’s non-GAAP earnings per share and free cash flow. As a result of the combination, MaxLinear expects to realize annualized run-rate synergies of $15 million within 12 months of closing.
Tender Offering and Closing
The acquisition will be conducted by means of a tender offer for all of the outstanding shares of common stock of Exar, followed by a second-step merger. The boards of directors of both companies have unanimously approved the transaction and MaxLinear has received support agreements from certain Exar stockholders, directors and management totaling approximately 20% of Exar’s common shares outstanding. The offer, which is expected to commence within the next 20 business days, will be subject to customary conditions, including satisfying the minimum tender requirement in the tender offer and U.S. regulatory approvals. MaxLinear currently expects the transaction to close in the second calendar quarter of 2017.
Stifel is acting as exclusive financial advisor to MaxLinear, and Wilson Sonsini Goodrich & Rosati, P.C. is acting as counsel for MaxLinear. JPMorgan Chase Bank, N.A. and Deutsche Bank Securities are providing committed debt financing for the transaction. Cowen and Company, LLC is acting as exclusive financial advisor to Exar, and Pillsbury Winthrop Shaw Pittman LLP is acting as counsel for Exar.