Sivers Semiconductors AB has entered into an agreement to acquire 100 per cent of the share capital of MixComm Inc., a US-based mmWave challenger fabless semiconductor company, for an initial purchase price of USD 135M (approximately SEK 1,173 million) on a debt-free basis. The consideration will be paid through a combination of USD 22.5 million (SEK 196 million) in cash and USD 112.5 million (approximately SEK 978 million) in 39,335,664 newly issued Sivers shares based on the 10-day volume weighted average price of a Sivers share prior to signing of the agreement. In addition, there is a performance-based earn-out of up to USD 20 million (SEK 174 million) to be paid in new Sivers shares based on the same share exchange ratio, tied to the achievement of certain commercial customer milestones within nine months from signing. Following this announcement, Sivers intends to effect a directed share issue to fund the cash consideration, transaction fees and expenses, and the ongoing working capital needs of the combined business.
Following completion, the enlarged Sivers group will be a global leader in 5G mmWave semiconductors, with strong capabilities and a broad joint IP portfolio of RFIC/BFIC (radio frequency/beam forming integrated circuits) chipsets in a wide variety of mmWave semiconductor technologies, including SiGe (Silicon Germanium) and RF-SOI (RF silicon-on-insulator). This IP portfolio will cover a broad spectrum of possible mmWave use cases such as unlicensed 5G, licensed 5G infrastructure, fixed wireless access (FWA) customer premises equipment (CPE) and satellite communications (SATCOM), with industry leading performance. The acquisition also enables the combined businesses to bring MixComm’s industry-first Antenna-in-Package technology to all mmWave applications.
Through this combination, Sivers will increase its total number of design wins by approximately 70 per cent to 44, as well as double the number of design wins expected to enter volume production within the next 12 months, from eight to 16. MixComm currently has 18 design wins, including with a major Tier 1 5G infrastructure customer, and a significant pipeline of potential new customer opportunities. MixComm has approximately 20 patents currently filed, granted or exclusively licensed and reported USD 1.3 million in revenue in H1 2021 with a strong sales pipeline for the coming year. MixComm estimates that its top three customers could generate approximately USD 70 million in aggregate revenue for 2022-2024, and an incremental USD 70 million in revenue from the Tier 1 customer in the 2025-2026 time period. The acquisition is expected to drive synergies across both revenue and product development through the significant level of commercial and technical complementarity, as well as the broader geographic coverage.
Driven by the exponential growth of the wireless connectivity and telecommunications sectors, the semiconductor industry is undergoing a significant technology-based transformation. This is supporting the deployment of new technologies such as the implementation of 5G connectivity, providing opportunities to reach new levels of efficiency and customer value.
Founded in 2017, MixComm is headquartered in Chatham, New Jersey (USA) and has design centres in Oregon and California. It is an active US participant in the 5G BFIC (repeaters/base stations), SATCOM and radar verticals. Led by a world class executive team, the company was built on more than 10 years of development at Columbia University led by Dr. Krishnaswamy (MixComm’s Co-Founder and CTO) through externally funded research projects totaling approximately USD 94 million across all projects and participants. The majority of MixComm’s employees hold a PhD and the company is the first and only mmWave company selected to join the 5G Open Innovation Lab founded by T-Mobile and Intel. MixComm’s flagship BFIC, the SUMMIT 2629, was the recipient of numerous “Best Products” citations in 2020, including “The Broadband Innovation of the Year” from the Mobile Breakthrough Awards. MixComm has established partnerships with GlobalFoundries (who is also a minority investor in MixComm) for RF-SOI fabrication, packaging and test services, and with Richardson RFPD for distribution and logistics globally. MixComm is currently majority owned by its founders, employees and Kairos Ventures, a leading US venture capital investor that identifies and commercializes the world’s leading scientific discoveries into viable businesses. Kairos will become a significant shareholder of Sivers following the closing of the transaction.
Completion of the acquisition is conditional upon, inter alia, the approval at an Extraordinary General Meeting (EGM) of Sivers to authorize the Board of Directors to issue the consideration shares as well as regulatory approval by CFIUS (the Committee on Foreign Investment in the United States). The EGM is expected to be held in the first half of November 2021. Shareholders representing approximately 41 per cent of the current outstanding voting rights of Sivers have committed to vote in favor of the transaction. The EGM will also propose the appointment of Todd Thomson, Chief Operating and Financial Officer of Kairos Ventures, to the Board of Directors of Sivers upon completion of the acquisition.
Completion is expected to take place by mid-Q1 2022 subject to the fulfilment of all conditions. The consideration shares would represent approximately 29 per cent of the current outstanding share capital of Sivers (assuming the earn-out is paid in full). The shares issued to the sellers will be subject to a lock-up of 12 months for 50 per cent of the consideration shares and 18 months for the remaining 50 per cent of the consideration shares.