Divestiture expected to enable higher growth
rate and accelerate path to achievement of target operating model
for remaining MACOM business
M/A-COM Technology Solutions Holdings, Inc. (NASDAQ: MTSI)
(MACOM), a leading supplier of high-performance analog RF,
microwave, millimeterwave and photonic semiconductor products,
today announced that it has entered into a definitive agreement to
sell its Automotive business to Autoliv ASP Inc. (Autoliv). The
Automotive business represented approximately 18% of MACOM’s
consolidated revenue in its second fiscal quarter ended April 3,
2015.
The agreed consideration to MACOM for the Automotive business is
to be $100 million in cash, subject to customary working capital
and other adjustments, plus the opportunity to receive up to an
additional $30 million in cash based on achievement of
revenue-based earn-out targets through 2019.
Commenting on the transaction, John Croteau, President and Chief
Executive Officer stated, “The divesture of
our Automotive business will enable MACOM to realize its
full potential as a pure-play high-performance analog company and
demonstrates our confidence in achieving high growth rates in our
retained core businesses. We anticipate our optical and laser
businesses will continue to outperform,
quickly contributing to consolidated MACOM earnings and
cash flow consistent with our pre-divestment expectations
for our business as a
whole, even without the Automotive business in
the portfolio. MACOM’s operating margin
has expanded to the point that
the Automotive business was no longer accretive to
our operating model, and therefore not consistent
with our long-term strategic vision from both a
growth and profitability perspective. We expect this
divestiture will significantly accelerate MACOM’s
achievement of its target operating model of 60% non-GAAP gross
margin and 30% non-GAAP operating margin.”
MACOM’s Board of Directors has approved the transaction, which
remains subject to antitrust approvals and other customary closing
conditions. It is currently expected to close in MACOM’s fourth
fiscal quarter of 2015.
Jefferies LLC acted as financial advisor and Perkins Coie LLP
acted as legal counsel to MACOM.
MACOM will discuss the transaction in further detail on its
upcoming earnings conference call to be held Tuesday, July 28,
2015.
About MACOM
MACOM (http://www.macom.com/) is a leading supplier of
high-performance analog RF, microwave, millimeterwave and photonic
semiconductor products that enable next-generation Internet and
modern battlefield applications. Recognized for its broad catalog
portfolio of technologies and products, MACOM serves diverse
markets, including high speed optical, satellite, radar, wired and
wireless networks, industrial, medical, and mobile devices. A
pillar of the semiconductor industry, MACOM thrives on more than 60
years of solving its customers' most complex problems, serving as a
true partner for applications ranging from RF to Light.
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, Partners from RF to Light, The
First Name in Microwave and related logos are trademarks of MACOM.
All other trademarks are the property of their respective
owners.
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 management. Forward-looking statements
include, among others, information concerning MACOM’s stated
business outlook and future results of operations (including any
statements regarding its expected growth rate or expected
achievement of its target operating model), statements regarding
the proposed divestiture of MACOM’s Automotive business and
expectations regarding the divestiture and its impact on MACOM, and
any statements regarding future trends, business strategies,
competitive position, industry conditions, acquisitions and market
opportunities. 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 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. 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 MACOM’s failure to complete the divestment, costs or
indemnification or other liabilities associated with the
divestment, matters arising in connection with the parties' efforts
to comply with and satisfy applicable regulatory approvals and
closing conditions relating to the divestment, failure to achieve
financial expectations related to the divestment or the earn-out
opportunity associated with the divestment, failure to achieve
expected synergies or successfully integrate acquired businesses,
or to achieve the expected accretion and other anticipated benefits
of such acquisitions, adverse reactions to the divestment by
employees, customers, suppliers or competitors, lower than expected
demand in any or all of MACOM’s primary end markets or from any of
its large OEM customers based on macro-economic weakness or
otherwise, MACOM's failure to realize the expected economies of
scale, lowered production cost and other anticipated benefits of
our previously announced GaN intellectual property licensing
program, the potential for defense spending cuts, program delays,
cancellations or sequestration, failures or delays by any customer
in winning business or to make purchases from MACOM in support of
such business, lack of adoption or delayed adoption by customers
and industries of GaN, Indium Phosphide lasers, or other solutions
offered by MACOM, failures or delays in porting and qualifying GaN
or Indium Phosphide laser process technology to MACOM’s Lowell, MA
fabrication facility or third party facilities, lower than expected
utilization and absorption in its manufacturing facilities, lack of
success or slower than expected success in 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 new product introductions, the potential that the expected
rollout of fiber-to-the-home network technology or other new
network technology deployments in China and other geographies fails
to occur, occurs more slowly than MACOM expects or does not result
in the amount or type of new business for MACOM that it
anticipates, 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 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 MACOM’s internal or outsourced
supply chain, the relative success of 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, litigation or
enforcement proceedings MACOM may be involved in, and the impact of
any claims of intellectual property infringement or
misappropriation, which could require MACOM 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 MACOM from selling certain of its 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
April 3, 2015 as filed with the SEC on May 13, 2015. MACOM
undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150716006602/en/
Company Contact:M/A-COM Technology Solutions Holdings,
Inc.Bob McMullan, 978-656-2753Chief Financial
Officerbob.mcmullan@macom.comorInvestor Relations
Contact:Shelton GroupLeanne K. Sievers, 949-224-3874EVPorBrett
L. Perry, 214-272-0070Managing
Directorsheltonir@sheltongroup.com
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