M/A-COM Technology Solutions Holdings Inc., 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 percent 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 percent non-GAAP gross margin and 30 percent 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.
Visit www.macom.com for more information.