MaxLinear, Inc. and Exar Corp. announced 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 percent 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”).
“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," said Dr. Kishore Seendripu, CEO of MaxLinear. "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, “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.”
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 percent 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.