Subsequent Event |
3 Months Ended |
|---|---|
Mar. 31, 2017 | |
| Subsequent Events [Abstract] | |
| Subsequent Events [Text Block] |
Subsequent Events
Acquisition of Exar Corporation
On March 29, 2017, the Company entered into a merger agreement with Exar Corporation, or Exar, a designer and developer of high performance analog mixed-signal integrated circuits and sub-system solutions, under which the Company agreed to acquire Exar for $13.00 per share in cash or an aggregate amount of approximately $700.0 million, or $472.0 million net of Exar’s cash acquired. The boards of directors of both MaxLinear and Exar have unanimously approved the transaction, which is subject to customary closing conditions and regulatory approvals. The Company intends to fund the transaction with cash from the balance sheet of the combined companies and approximately $425.0 million of new transaction debt. The transaction is currently expected to close in the second quarter of 2017.
In connection with the merger agreement, MaxLinear entered into a debt commitment letter effective March 28, 2017 with certain initial lenders who have committed to provide a secured term loan facility in an aggregate principal amount of up to $425.0 million, subject to the satisfaction of certain customary closing conditions. The facilities are available (i) to finance the Merger, refinance certain existing indebtedness of Exar and its subsidiaries, and fund all related transactions, (ii) to pay fees and expenses incurred in connection therewith and (iii) for working capital and general corporate purposes. The commitment letter provides that the term loan facility will have a seven-year term and that term loans will bear interest at either an Adjusted LIBOR or an Adjusted Base Rate, at the Company's option, and, in each case, plus a fixed applicable margin. The definitive documentation governing the debt financing has not been finalized, and, accordingly, the actual terms may differ from the description of such terms in the commitment letter.
Acquisition of Spain Entity and Certain Assets and Assumption of Certain Liabilities of the G.hn business of Marvell Semiconductor, Inc.
On April 4, 2017, the Company consummated the transactions contemplated by a share and asset acquisition agreement with Marvell Semiconductor, Inc., or Marvell, to purchase the Spain entity of Marvell along with the acquisition of certain assets and assumption of certain liabilities of Marvell’s G.hn business for aggregate cash consideration of $21.0 million. The Company also hired certain employees of the G.hn business outside of Spain, and employees of Marvell's former Spain subsidiary remained employees of the same company, which is now a subsidiary of MaxLinear. The assets acquired include, among other things, patents and other intellectual property, a workforce-in-place and other intangible assets, as well as tangible assets that include but are not limited to production masks and other production related assets, inventory and other property and equipment. The liabilities assumed include, among other things, product warranty obligations and accrued vacation and severance obligations for employees of Marvell that were acquired or hired by the Company upon close of the acquisition. The acquired assets and assumed liabilities, together with the employees who joined MaxLinear and its subsidiaries as a result of the transaction, represent a business as defined in ASC 805, Business Combinations. The Company intends to integrate the acquired assets and employees into the Company's existing business.
Singapore Tax Incentives
In April 2017, the Company began operating under certain favorable tax incentives in Singapore, which are generally effective through March 2022 and may be extended through March 2027. The incentives are conditional upon our meeting certain employment and investment thresholds over time.
Exar Shareholder Litigation
On April 18, 2017, The Vladimir Gusinsky Revocable Trust, which alleges that it owns 110 shares of common stock in Exar, filed a complaint in the United States District Court for the Northern District of California against Exar, its board of directors, MaxLinear, and Eagle Acquisition Corporation (a wholly owned subsidiary of MaxLinear), captioned The Vladimir Gusinsky Rev. Trust v. Exar Corp. et al., No. 5:17-CV-2150-SI (N.D. Cal.). On April 25, 2017, Richard E. Marshall, who alleges that he owns 25 shares of common stock in Exar, filed a complaint in United States District Court for the Northern District of California against Exar and its board of directors, captioned Marshall v. Exar Corp. et al., No. 3:17-CV-02334 (N.D. Cal.). MaxLinear and Eagle Acquisition Corp. are not named as defendants in the Marshall action. The complaints generally allege that the proposed merger with Exar offers inadequate consideration to Exar’s shareholders and that the Schedule 14D-9 filed by Exar in connection with the merger omits material information. The complaints purport to bring class claims for violation of sections 14(e), 14(d), and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 14d-9. The complaints seek certification of a class; an injunction barring the merger or, if defendants enter into the merger, an order rescinding it or awarding rescissory damages; declaratory relief; and plaintiff’s costs, including attorneys’ fees and experts’ fees. Additional similar lawsuits may be filed in the future.
On or about May 3, 2017, the parties to the above-referenced lawsuits reached an agreement in principle whereby plaintiffs will voluntarily dismiss the claims brought by Mr. Marshall and The Vladimir Gusinsky Revocable Trust with prejudice (but without prejudice as to other members of the putative class), defendants will make certain supplemental disclosures, and the plaintiffs will seek a mootness fee from the Court. On May 3, 2017, Exar made the supplemental disclosures contemplated by this agreement in principle.
Should the contemplated resolution of these lawsuits not become final, the defendants intend to vigorously defend against this and any subsequently filed similar actions. However, the Company cannot predict the outcome of the Exar shareholder litigation. Any adverse determination in the Exar shareholder litigation could have a material adverse effect on the Company's business and operating results.
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