S-4/A 1 d876220ds4a.htm AMENDMENT NO. 1 TO FORM S-4 Amendment No. 1 to Form S-4
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As filed with the Securities and Exchange Commission on March 26, 2020

Registration No. 333-236492

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1

to

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

XRAY-TWOLF HOLDCO CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   3674   84-4734590
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)

 

c/o Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

(408) 321-6000

 

c/o TiVo Corporation

2160 Gold Street

San Jose, California 95002

(408) 519-9100

(Name, address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

 

Jon Kirchner

XRAY-TWOLF HoldCo Corporation

c/o Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

(408) 321-6000

 

David Shull

XRAY-TWOLF HoldCo Corporation

c/o TiVo Corporation

2160 Gold Street

San Jose, California 95002

(408) 519-9100

(Name, address, including zip code, and telephone number, including area code, of agents for service)

 

 

Copies to:

 

Paul Davis, Esq.

Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

(408) 321-6000

 

Pamela Sergeeff, Esq.

TiVo Corporation

2160 Gold Street

San Jose, California 95002

(408) 519-9100

 

Kenton J. King, Esq.

Mike Ringler, Esq.

Skadden, Arps, Slate,

Meagher & Flom LLP

525 University Avenue, Suite 1400

Palo Alto, California 94301

(650) 470-4500

  

Jon Gavenman, Esq.

Steven J. Tonsfeldt, Esq.

Ian A. Nussbaum, Esq.

Sepideh Mousakhani, Esq.

Cooley LLP

3175 Hanover Street

Palo Alto, California 94304

(650) 843-5000

 

 

Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and upon completion of the mergers described in the enclosed document.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross Border Third Party Tender Offer)  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of

securities to be registered

 

Amount

to be

Registered(1)

 

Proposed

maximum

offering price

per share

 

Proposed

maximum

aggregate

offering price(2)

  Amount of
registration fee(3)

Common Stock, par value $0.001 per share

 

115,138,366

  N/A   $985,264,456.62   $127,887

 

 

(1)

Represents the maximum number of shares of common stock, par value $0.001 per share, of the Registrant, which we refer to as HoldCo, estimated to be issuable upon consummation of the mergers described herein, calculated by totaling (a) the product obtained by multiplying (x) 54,050,460 shares (on a fully diluted basis) of common stock, par value $0.001 per share, of Xperi Corporation, which we refer to as Xperi (the maximum number of shares of Xperi common stock that may be canceled and exchanged in the Xperi merger), by (y) the exchange ratio of 1.000 per share of HoldCo common stock for each share of Xperi common stock, plus (b) the product obtained by multiplying (x) 134,259,135 shares (on a fully diluted basis) of common stock, par value $0.001 per share, of TiVo Corporation, which we refer to as TiVo (the maximum number of shares of TiVo common stock that may be canceled and exchanged in the TiVo merger), by (y) the exchange ratio of 0.455 per share of HoldCo common stock for each share of TiVo common stock.

(2)

Pursuant to Rules 457(f)(1), 457(f)(3) and 457(c) under the Securities Act and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is the sum of (a) the product obtained by multiplying (x) $11.47 (the average of the high and low prices of Xperi common stock on March 23, 2020, as reported on the Nasdaq Stock Market, which we refer to as the Nasdaq), by (y) 54,050,460 shares of Xperi common stock (the maximum number of shares of Xperi common stock that may be canceled and exchanged in the Xperi merger), and by (z) the exchange ratio of 1.000 per share of HoldCo common stock for each share of Xperi common stock, plus (b) the product obtained by multiplying (x) $5.98 (the average of the high and low prices of TiVo common stock on March 23, 2020, as reported on the Nasdaq), by (y) 134,259,135 shares of TiVo common stock (the maximum number of shares of TiVo common stock that may be canceled and exchanged in the TiVo merger, and by (z) the exchange ratio of 0.455 per share of HoldCo common stock for each share of TiVo common stock).

(3)

The Registrant previously paid the registration fee with prior filings of this Registration Statement.

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such dates as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED MARCH 26, 2020

 

LOGO

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

 

 

Xperi Corporation, which we refer to as Xperi, and TiVo Corporation, which we refer to as TiVo, have entered into an Agreement and Plan of Merger and Reorganization, dated as of December 18, 2019, as amended on January 31, 2020, as it may be further amended from time to time, which we refer to as the merger agreement. Pursuant to the terms of the merger agreement, Xperi and TiVo will each merge with wholly owned subsidiaries of a newly formed corporation, named XRAY-TWOLF HoldCo Corporation, which we refer to as HoldCo. As a result of such mergers, Xperi and TiVo will become subsidiaries of HoldCo. We believe the merger of equals will combine two industry leaders to create a global consumer and entertainment technology business and one of the industry’s largest intellectual property licensing platforms. We believe that the mergers will benefit both the Xperi stockholders and the TiVo stockholders and we ask for your support in voting for the merger proposals at our respective special meetings.

If the mergers are completed, holders of Xperi common stock will be entitled to receive one (1) share of HoldCo common stock for each share of Xperi common stock they hold, which we refer to as the Xperi exchange ratio, and holders of TiVo common stock will be entitled to receive 0.455 shares of HoldCo common stock for each share of TiVo common stock they hold, which we refer to as the TiVo exchange ratio, in addition to cash in lieu of any fractional shares. It is expected that the Xperi exchange ratio and the TiVo exchange ratio will result in Xperi common stockholders owning approximately 46.5% of HoldCo and TiVo common stockholders owning approximately 53.5% of HoldCo immediately following the effective time of the mergers. Xperi common stock is currently traded on the Nasdaq Stock Market under the symbol “XPER” and TiVo common stock is currently traded on the Nasdaq Stock Market under the symbol “TIVO.” Based on the number of shares of Xperi common stock and TiVo common stock expected to be outstanding immediately prior to the effective time, HoldCo expects to issue approximately 115,138,366 shares of HoldCo common stock. We expect that HoldCo common stock will be listed on the Nasdaq Stock Market under the symbol “XPER.” We urge you to obtain current market quotations of Xperi and TiVo common stock prior to casting your vote.

Xperi and TiVo will each hold a special meeting of their respective stockholders in connection with the proposed mergers, which we refer to as the Xperi special meeting or TiVo special meeting, respectively.

At the Xperi special meeting, Xperi stockholders will be asked to consider and vote on (i) a proposal to adopt the merger agreement, which we refer to as the Xperi merger proposal, (ii) a proposal to adjourn the Xperi special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Xperi merger proposal and (iii) a non-binding, advisory proposal to approve the compensation that may become payable to Xperi’s named executive officers in connection with the consummation of the mergers. The Xperi board recommends that Xperi stockholders vote “FOR” each of the proposals to be considered at the Xperi special meeting.

At the TiVo special meeting, TiVo stockholders will be asked to consider and vote on (i) a proposal to adopt the merger agreement, which we refer to as the TiVo merger proposal, (ii) a proposal to adjourn the TiVo special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the TiVo merger proposal and (iii) a non-binding, advisory proposal to approve the compensation that may become payable to TiVo’s named executive officers in connection with the consummation of the mergers. The TiVo board recommends that TiVo stockholders vote “FOR” each of the proposals to be considered at the TiVo special meeting.

We cannot complete the mergers unless the Xperi stockholders approve the Xperi merger proposal and the TiVo stockholders approve the TiVo merger proposal. Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the Xperi special meeting in person and/or the TiVo special meeting virtually via live audio-only webcast, as applicable, please promptly mark, sign and date the accompanying proxy and return it promptly in the enclosed postage-paid envelope, or authorize the individuals named on your proxy card to vote your shares by calling the toll-free telephone number or by using the Internet to vote your shares before the meeting as described in the instructions included with your proxy card.

The obligations of Xperi and TiVo to complete the mergers are subject to the satisfaction or waiver of several conditions set forth in the merger agreement. More information about Xperi, TiVo, HoldCo and the mergers is contained in this joint proxy statement/prospectus. Xperi and TiVo encourage you to read this entire joint proxy statement/prospectus carefully, including the section entitled “Risk Factors” beginning on page 26.

We look forward to the successful combination of Xperi and TiVo.

Sincerely,

 

Jon Kirchner

Chief Executive Officer

Xperi Corporation

  

David Shull

Chief Executive Officer

TiVo Corporation

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this joint proxy statement/prospectus or determined that this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated [], 2020 and is first being mailed to the stockholders of Xperi and stockholders of TiVo on or about [], 2020.


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LOGO

Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

www.Xperi.com

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To be Held on [], 2020

TIME: [●] (local time) on [●], 2020

PLACE: [●]*

ITEMS OF BUSINESS:

 

   

Proposal 1: To consider and vote on a proposal (the “Xperi merger proposal”) to adopt the Agreement and Plan of Merger and Reorganization, dated as of December 18, 2019, as amended on January 31, 2020 (as it may be further amended from time to time, the “merger agreement”), by and among Xperi Corporation, a Delaware corporation (“Xperi”), TiVo Corporation, a Delaware Corporation (“TiVo”), XRAY-TWOLF HoldCo Corporation, a Delaware Corporation (“HoldCo”), XRAY Merger Sub Corporation, a Delaware corporation (“Xperi Merger Sub”) and TWOLF Merger Sub Corporation, a Delaware corporation (“TiVo Merger Sub”), a copy of which is attached as Annex A to the joint proxy statement/prospectus accompanying this notice;

 

   

Proposal 2: To consider and vote on a proposal to adjourn the Xperi special meeting (as defined below), if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Xperi merger proposal (the “Xperi adjournment proposal”); and

 

   

Proposal 3: To consider and vote on a non-binding, advisory proposal to approve the compensation that may become payable to Xperi’s named executive officers in connection with the consummation of the mergers (the “Xperi compensation proposal”).

The joint proxy statement/prospectus accompanying this notice, including the annexes thereto, contains further information with respect to the business to be transacted at the special meeting of the Xperi stockholders, which we refer to as the Xperi special meeting. We urge you to read the joint proxy statement/prospectus, including any documents incorporated by reference, and the annexes carefully and in their entirety. Xperi will transact no other business at the Xperi special meeting except such business as may properly be brought before the Xperi special meeting or any adjournments or postponements thereof. Please refer to the joint proxy statement/prospectus of which this notice forms a part for further information with respect to the business to be transacted at the Xperi special meeting.

BOARD OF DIRECTORS’ RECOMMENDATION:

After careful consideration, the Xperi board of directors, on December 17, 2019, approved the merger agreement and determined that entering into the merger agreement and consummating the transactions contemplated thereby are advisable, fair to and in the best interests of Xperi and its stockholders.

 

* 

Due to concerns about the coronavirus or COVID-19 and to assist in protecting the public health and well-being of Xperi’s stockholders and employees, Xperi is planning for the possibility that the Xperi special meeting may be held solely by means of remote communication (i.e., a virtual-only meeting). If Xperi takes this step, Xperi will publicly announce, as soon as practicable prior to the Xperi special meeting, the decision in a press release and post additional information on Xperi’s investor relations website at investor.xperi.com. We recommend that you monitor this website for updated information, and please check the website in advance of the Xperi special meeting date if you are planning to attend in person.


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The Xperi board of directors recommends that the Xperi stockholders vote “FOR” each of the Xperi merger proposal, the Xperi adjournment proposal and the Xperi compensation proposal.

WHO MAY VOTE:

Only holders of record of Xperi common stock at the close of business on April 13, 2020, the record date for voting at the Xperi special meeting, are entitled to vote at the Xperi special meeting. On the record date, [●] shares of Xperi common stock were outstanding. Each share of Xperi common stock is entitled to one (1) vote.

VOTE REQUIRED FOR APPROVAL:

Your vote is very important. We cannot complete the mergers without the approval of the Xperi merger proposal. The presence, in person or by proxy, of a majority of the shares entitled to vote constitutes a quorum, and the approval of the Xperi merger proposal requires the affirmative vote of the holders of a majority of all outstanding shares of Xperi common stock entitled to vote on the Xperi merger proposal. Assuming a quorum is present, approval of each of the Xperi adjournment proposal and the Xperi compensation proposal requires the affirmative vote of the majority of shares present in person or represented by proxy and entitled to vote at the Xperi special meeting.

Whether or not you plan to attend the Xperi special meeting, please promptly mark, sign and date the accompanying proxy and return it promptly in the enclosed postage-paid envelope, or authorize the individuals named on your proxy card to vote your shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with your proxy card. If your shares are held in the name of a broker or other nominee, please follow the instructions on a voting instruction card furnished by the record holder.

By order of the Board of Directors,

Paul Davis

Secretary

San Jose, California

[●], 2020


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LOGO

TiVo Corporation

2160 Gold Street

San Jose, California 95002

www.TiVo.com

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To be Held on [], 2020

TIME: [●] (Pacific Time) on [●], 2020. Online check-in will begin at [●] Pacific Time and you should allow ample time for the check-in procedures.

PLACE: Due to the public health concerns regarding the COVID-19 outbreak, the TiVo special meeting will be held virtually via live audio-only webcast at www.virtualshareholdermeeting.com/TIVO2020. The TiVo special meeting will be held online only and you will not be able to attend in person. You will be able to vote your shares electronically by Internet and submit questions online during the meeting by logging in to the website listed above using the 16-digit control number included in your proxy card.

ADMISSION: To attend the meeting, you will need the 16-digit control number included in your proxy card.

ITEMS OF BUSINESS:

 

   

Proposal 1: To consider and vote on a proposal (the “TiVo merger proposal”) to adopt the Agreement and Plan of Merger and Reorganization, dated as of December 18, 2019, as amended on January 31, 2020 (as it may be further amended from time to time, the “merger agreement”), by and among Xperi Corporation, a Delaware corporation (“Xperi”), TiVo Corporation, a Delaware corporation (“TiVo”), XRAY-TWOLF HoldCo Corporation, a Delaware corporation (“HoldCo”), XRAY Merger Sub Corporation, a Delaware corporation (“Xperi Merger Sub”) and TWOLF Merger Sub Corporation, a Delaware corporation (“TiVo Merger Sub”), a copy of which is attached as Annex A to the joint proxy statement/prospectus accompanying this notice;

 

   

Proposal 2: To consider and vote on a proposal to adjourn the TiVo special meeting (as defined below), if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the TiVo merger proposal (the “TiVo adjournment proposal”); and

 

   

Proposal 3: To consider and vote on a non-binding, advisory proposal to approve the compensation that may become payable to TiVo’s named executive officers in connection with the consummation of the mergers (the “TiVo compensation proposal”).

The joint proxy statement/prospectus accompanying this notice, including the annexes thereto, contains further information with respect to the business to be transacted at the special meeting of the TiVo stockholders, which we refer to as the TiVo special meeting. We urge you to read the joint proxy statement/prospectus, including any documents incorporated by reference, and the annexes carefully and in their entirety. TiVo will transact no other business at the TiVo special meeting except such business as may properly be brought before the TiVo special meeting or any adjournments or postponements thereof. Please refer to the joint proxy statement/prospectus of which this notice forms a part for further information with respect to the business to be transacted at the TiVo special meeting.

BOARD OF DIRECTORS’ RECOMMENDATION:

After careful consideration, the TiVo board of directors, on December 18, 2019, approved the merger agreement and determined that entering into the merger agreement and consummating the transactions contemplated thereby, including the TiVo merger, are advisable and fair to and in the best interests of TiVo and its stockholders.

The TiVo board of directors recommends that the TiVo stockholders vote “FOR” each of the TiVo merger proposal, the TiVo adjournment proposal and the TiVo compensation proposal.


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WHO MAY VOTE:

Only holders of record of TiVo common stock at the close of business on [●], the record date for voting at the TiVo special meeting, are entitled to vote at the TiVo special meeting. On the record date, [●] shares of TiVo common stock were outstanding. Each share of TiVo common stock is entitled to one (1) vote.

VOTE REQUIRED FOR APPROVAL:

Your vote is very important. We cannot complete the mergers without the approval of the TiVo merger proposal. Assuming a quorum is present, the approval of the TiVo merger proposal requires the affirmative vote of the holders of a majority of all outstanding shares of TiVo common stock entitled to vote on the TiVo merger proposal. The approval of the TiVo adjournment proposal requires the affirmative vote of a majority of the shares of TiVo common stock represented in person or by proxy at the TiVo special meeting. Assuming a quorum is present, the approval of the TiVo compensation proposal requires the affirmative vote of a majority of the shares of TiVo common stock represented in person or by proxy and entitled to vote at the TiVo special meeting. TiVo stockholders who virtually attend the TiVo special meeting via live audio-only webcast at www.virtualshareholdermeeting.com/TIVO2020 will be considered present “in person” for purposes of establishing a quorum and for all other purposes.

Whether or not you plan to attend the TiVo special meeting virtually via live audio-only webcast, please promptly mark, sign and date the accompanying proxy and return it promptly in the enclosed postage-paid envelope, or authorize the individuals named on your proxy card to vote your shares by calling the toll-free telephone number or by using the Internet to vote your shares before the meeting as described in the instructions included with your proxy card. If your shares are held in the name of a broker or other nominee, please follow the instructions on a voting instruction card furnished by the record holder.

By order of the Board of Directors,

Pamela Sergeeff

Secretary

San Jose, California

[●], 2020


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ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates important business and financial information about Xperi and TiVo from other documents that each company has filed with the Securities and Exchange Commission, which we refer to as the SEC, which documents are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this joint proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

(818) 436-1231

Attn: Investor Relations

IR@Xperi.com

  

TiVo Corporation

2160 Gold Street

San Jose, California 95002

(818) 295-6651

Attn: Investor Relations

IR@TiVo.com

Investors may also consult Xperi’s or TiVo’s websites for more information concerning the mergers described in this joint proxy statement/prospectus. Xperi’s website is www.Xperi.com. TiVo’s website is www.TiVo.com. The transaction website is: www.XperiTiVo.TransactionAnnouncement.com. Information included on any of these websites is not incorporated by reference into this joint proxy statement/prospectus.

If you would like to request any documents, please do so by [], 2020 in order to receive them before the respective special meetings.

In addition, if you have questions about the mergers or the special meetings, or if you need to obtain copies of the accompanying joint proxy statement/prospectus, proxy cards, election forms or other documents incorporated by reference in the joint proxy statement/prospectus, you may contact the appropriate contact listed below. You will not be charged for any of the documents you request.

 

If you are an Xperi stockholder:    If you are a TiVo stockholder:
LOGO    LOGO
By Mail:  

Alliance Advisors, LLC

200 Broadacres Drive, 3rd Floor        

Bloomfield, New Jersey 07003

   By Mail:  

MacKenzie Partners, Inc.

1407 Broadway Avenue, 27th Floor

New York, New York 10018

By Telephone:   Toll-Free:     (800) 574-6109    By Telephone:  

Call Collect:

Toll-Free:

 

(212) 929-5500

(800) 322-2885

     By Email:   proxy@mackenziepartners.com

For more information, see “Where You Can Find More Information” beginning on page 211.

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 (File No. 333-236492) filed with the SEC by XRAY-TWOLF HoldCo Corporation, which we refer to as HoldCo, constitutes a prospectus of HoldCo under Section 5 of the Securities Act of 1933, as amended, which we refer to as the Securities Act, with respect to the shares of HoldCo common stock to be issued to Xperi stockholders and


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TiVo stockholders pursuant to the Agreement and Plan of Merger and Reorganization, dated December 18, 2019, as amended on January 31, 2020, as it may be further amended from time to time, which we refer to as the merger agreement. This joint proxy statement/prospectus also constitutes a joint proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. It also constitutes a notice of meeting with respect to the special meeting of Xperi stockholders, which we refer to as the Xperi special meeting, and a notice of meeting with respect to the special meeting of TiVo stockholders, which we refer to as the TiVo special meeting and, together with the Xperi special meeting, which we refer to as the special meetings.

You should rely only on the information contained in or incorporated by reference into this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated [●], 2020. You should not assume that the information contained in, or incorporated by reference into, this joint proxy statement/prospectus is accurate as of any date other than that date. Neither our mailing of this joint proxy statement/prospectus to Xperi stockholders and/or TiVo stockholders, nor the issuance by HoldCo of common stock in connection with the mergers, will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this joint proxy statement/prospectus regarding Xperi has been provided by Xperi and information contained in this joint proxy statement/prospectus regarding TiVo has been provided by TiVo.

Unless otherwise indicated or as the context otherwise requires, all references in this joint proxy statement/prospectus to:

 

   

Centerview refers to Centerview Partners LLC;

 

   

closing” refers to the closing of the mergers;

 

   

Code” refers to the Internal Revenue Code of 1986, as amended;

 

   

combined company” refers to HoldCo, following completion of the mergers;

 

   

Cooley” refers to Cooley LLP;

 

   

DGCL” refers to the General Corporation Law of the State of Delaware;

 

   

effective time” refers to the effective time of the mergers;

 

   

HoldCo” refers to XRAY-TWOLF HoldCo Corporation, a Delaware corporation and, prior to the effective time, jointly owned subsidiary of Xperi and TiVo;

 

   

HoldCo board” refers to the board of directors of HoldCo;

 

   

HoldCo bylaws” refers to the amended and restated bylaws of the combined company, substantially in the form attached as Annex E to this joint proxy statement/prospectus;

 

   

HoldCo charter” refers to the amended and restated certificate of incorporation of the combined company, substantially in the form attached as Annex D to this joint proxy statement/prospectus;

 

   

HoldCo common stock” refers to the common stock, par value $0.001 per share, of HoldCo;

 

   

HoldCo stockholders” refers to the holders of HoldCo common stock;

 

   

HSR Act” refers to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder;

 

   

IRS” refers to the Internal Revenue Service;

 

   

LionTree” refers to LionTree Advisors LLC;


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merger agreement” refers to the Agreement and Plan of Merger and Reorganization, dated as of December 18, 2019, as amended on January 31, 2020, as it may be further amended from time to time, by and among TiVo, TiVo Merger Sub, Xperi, Xperi Merger Sub and HoldCo;

 

   

merger consideration” refers collectively to the TiVo merger consideration and the Xperi merger consideration;

 

   

mergers” refers collectively to the TiVo merger and Xperi merger;

 

   

SEC” refers to the U.S. Securities and Exchange Commission;

 

   

Skadden” refers to Skadden, Arps, Slate, Meagher & Flom LLP;

 

   

stockholder approvals” refers collectively to the TiVo stockholder approval and the Xperi stockholder approval;

 

   

TiVo” refers to TiVo Corporation, a Delaware corporation;

 

   

TiVo board” refers to the board of directors of TiVo;

 

   

TiVo common stock” refers to the common stock, par value $0.001 per share, of TiVo;

 

   

TiVo exchange ratio” refers to 0.455;

 

   

TiVo’s financial advisor” refers to LionTree;

 

   

TiVo merger” refers to the merger of TiVo Merger Sub with and into TiVo, with TiVo surviving the merger as a subsidiary of HoldCo;

 

   

TiVo merger consideration” refers to the right of holders of TiVo common stock to receive 0.455 shares of HoldCo common stock for each share of TiVo common stock, together with cash in lieu of any fractional shares of HoldCo common stock;

 

   

TiVo Merger Sub” refers to TWOLF Merger Sub Corporation, a Delaware corporation and a wholly owned subsidiary of HoldCo;

 

   

TiVo stockholder approval” refers to the adoption of the merger agreement at the TiVo special meeting by the affirmative vote of the holders of a majority of all outstanding shares of TiVo common stock as of the record date for the TiVo special meeting;

 

   

TiVo stockholders” refers to the holders of TiVo common stock;

 

   

we,” “our” and “us” refer to Xperi and TiVo, collectively;

 

   

Xperi” refers to Xperi Corporation, a Delaware corporation;

 

   

Xperi board” refers to the board of directors of Xperi;

 

   

Xperi common stock” refers to the common stock, par value $0.001 per share, of Xperi;

 

   

Xperi exchange ratio” refers to 1.000;

 

   

Xperi’s financial advisor” refers to Centerview;

 

   

Xperi merger” refers to the merger of Xperi Merger Sub with and into Xperi, with Xperi surviving the merger as a subsidiary of HoldCo;

 

   

Xperi merger consideration” refers to the right of holders of Xperi common stock to receive one (1) share of HoldCo common stock for each share of Xperi common stock;

 

   

Xperi Merger Sub” refers to XRAY Merger Sub Corporation, a Delaware corporation and a wholly owned subsidiary of HoldCo;

 

   

Xperi stockholder approval” refers to the adoption of the merger agreement at the Xperi special meeting by the affirmative vote of the holders of a majority of all outstanding shares of Xperi common stock as of the record date for the Xperi special meeting; and

 

   

Xperi stockholders” refers to the holders of Xperi common stock.


Table of Contents

Table of Contents

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     iv  

QUESTIONS AND ANSWERS

     vi  

About the Mergers

     vi  

About the Xperi Special Meeting

     xii  

About the TiVo Special Meeting

     xviii  

SUMMARY

     1  

The Companies

     1  

The Merger Agreement and the Merger

     3  

Listing of HoldCo Common Stock

     17  

De-listing and Deregistration of Xperi Common Stock and TiVo Common Stock

     17  

Comparison of Xperi Stockholder Rights

     17  

Comparison of TiVo Stockholder Rights

     18  

The Xperi Special Meeting

     18  

The TiVo Special Meeting

     19  

Selected Historical Financial Data of Xperi

     21  

Selected Historical Financial Data of TiVo

     22  

Summary Unaudited Pro Forma Condensed Combined Financial Information

     23  

Equivalent and Comparative Per Share Information

     24  

Comparative Per Share Market Price

     25  

RISK FACTORS

     26  

Risks Related to the Mergers

     26  

Risks Related to the Combined Company

     35  

Risks Related to Xperi’s Business

     41  

Risks Related to TiVo’s Business

     41  

THE COMPANIES

     42  

Xperi Corporation

     42  

TiVo Corporation

     42  

XRAY-TWOLF HoldCo Corporation

     42  

Xperi Merger Sub

     43  

TiVo Merger Sub

     43  

XPERI PROPOSAL 1 AND TIVO PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT

     44  

The Mergers

     44  

Contemplated Business Separation

     39  

Background of the Mergers

     45  

Recommendation of the Xperi Board of Directors

     58  

Xperi’s Reasons for the Mergers

     58  

Opinion of Xperi’s Financial Advisor

     62  

Interests of Xperi Directors and Executive Officers in the Mergers

     75  

Recommendation of the TiVo Board of Directors

     81  

TiVo’s Reasons for the Mergers

     82  

Opinion of TiVo’s Financial Advisor

     84  

Interests of TiVo Directors and Executive Officers in the Mergers

     97  

Financial Forecasts

     103  

Certain Xperi Forecasts

     103  

Certain TiVo Forecasts

     112  

HoldCo Matters

     117  

HoldCo Governance

     117  

HoldCo Dividend Policy

     118  

Listing of HoldCo Common Stock

     118  

Debt Recapitalization

     119  

 

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Regulatory Approvals

     119  

Exchange of Shares for Merger Consideration

     119  

Xperi Stockholders and TiVo Stockholders

     120  

Treatment of Equity Awards in the Mergers

     120  

Treatment of Xperi Equity Awards

     120  

Treatment of TiVo Equity Awards

     121  

New HoldCo Equity Awards

     122  

New HoldCo Equity Incentive Plan

     122  

New HoldCo Employee Stock Purchase Plan

     126  

Material U.S. Federal Income Tax Consequences of the Mergers

     129  

Accounting Treatment of the Mergers

     131  

De-Listing and Deregistration

     132  

Xperi Common Stock

     132  

TiVo Common Stock

     132  

No Appraisal Rights

     132  

The Merger Agreement

     132  

XPERI PROPOSAL 2 AND TIVO PROPOSAL 2: ADJOURNMENT TO SOLICIT ADDITIONAL PROXIES

     156  

Adjournment of Xperi Special Meeting

     156  

Adjournment of TiVo Special Meeting

     156  

XPERI PROPOSAL 3 AND TIVO PROPOSAL 3: ADVISORY (NON-BINDING) VOTE ON COMPENSATION

     157  

Xperi Compensation Disclosure

     157  

TiVo Compensation Disclosure

     157  

THE XPERI SPECIAL MEETING

     159  

General

     159  

Date, Time and Place

     159  

Purpose of the Special Meeting

     159  

Recommendation of the Board of Directors

     159  

Record Date

     159  

Quorum

     160  

Required Vote

     160  

Abstentions and Broker Non-Votes

     160  

Shares and Voting of Xperi’s Directors and Executive Officers

     161  

How to Vote

     161  

Voting in Person

     161  

How to Attend the Special Meeting

     162  

Voting of Shares Held in Street Name

     162  

Voting by Proxy

     162  

How Proxies Are Counted

     163  

Revocability of Proxies

     163  

Solicitation of Proxies

     163  

Tabulation of Votes

     164  

Confidential Voting

     164  

Adjournments

     164  

Assistance

     164  

THE TIVO SPECIAL MEETING

     165  

General

     165  

Date, Time and Place

     165  

Purpose of the Special Meeting

     165  

Recommendation of the Board of Directors

     165  

Record Date

     165  

 

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Quorum

     166  

Required Vote

     166  

Abstentions and Broker Non-Votes

     166  

Shares and Voting of TiVo’s Directors and Executive Officers

     167  

How to Vote Before the TiVo Special Meeting

     167  

How to Vote at the TiVo Special Meeting

     167  

How to Attend the Special Meeting

     167  

Voting of Shares Held in Street Name

     168  

Voting by Proxy

     168  

How Proxies Are Counted

     169  

Revocability of Proxies

     169  

Solicitation of Proxies

     170  

Tabulation of Votes

     170  

Confidential Voting

     170  

Adjournments

     170  

Assistance

     171  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     172  

DESCRIPTION OF HOLDCO CAPITAL STOCK

     187  

Authorized Capital Stock

     187  

Common Stock

     187  

Additional Classes or Series of Preferred Stock

     188  

Charter and Bylaw Provisions; Takeover Statutes

     188  

COMPARISON OF RIGHTS OF STOCKHOLDERS

     191  

HoldCo Stockholder Rights

     191  

LEGAL MATTERS

     209  

EXPERTS

     209  

Xperi

     209  

TiVo

     209  

FUTURE STOCKHOLDER PROPOSALS

     209  

Xperi

     209  

TiVo

     209  

OTHER MATTERS

     210  

HOUSEHOLDING

     210  

Xperi

     210  

TiVo

     211  

WHERE YOU CAN FIND MORE INFORMATION

     211  

ANNEX A-1—AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

     A-1-1  

ANNEX A-2—AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

     A-2-1  

ANNEX B—OPINION OF CENTERVIEW

     B-1  

ANNEX C—OPINION OF LIONTREE

     C-1  

ANNEX D—FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF HOLDCO

     D-1  

ANNEX E—FORM OF AMENDED AND RESTATED BYLAWS OF HOLDCO

     E-1  

PART II INFORMATION NOT REQUIRED IN PROSPECTUS

     II-1  

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained or incorporated by reference into this joint proxy statement/prospectus are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Words such as “anticipate,” “estimate,” “continue,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “objective,” “goal,” “positions,” “prospects,” “potential,” “will,” “would,” “should,” “could,” “may” and words and terms of similar substance are intended to identify forward-looking statements. All forward-looking statements are management’s present expectations or forecasts of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In addition to the factors relating to the merger discussed under the caption “Risk Factors” beginning on page 26 and the factors previously disclosed in Xperi’s and TiVo’s reports filed with the SEC, the following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements:

 

  (i)

the completion of the mergers on anticipated terms and timing, including obtaining stockholder and regulatory approvals, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, cost savings, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of HoldCo’s businesses and other conditions to the completion of the transaction;

 

  (ii)

failure to realize the anticipated benefits of the mergers, including as a result of delay in completing the transaction, integrating the businesses of Xperi and TiVo or implementing any contemplated business separation (if undertaken);

 

  (iii)

any contemplated separation of the product and IP licensing businesses of the combined company post-mergers in a tax efficient transaction on anticipated terms and timing, including a number of conditions which could delay, prevent or otherwise adversely affect the contemplated business separation transaction, including a decision by the HoldCo board not to proceed, possible issues or delays in obtaining required regulatory approvals or clearances, disruptions in the financial markets or other potential barriers;

 

  (iv)

Xperi’s and TiVo’s ability to implement their respective business strategies;

 

  (v)

pricing trends, including Xperi’s and TiVo’s ability to achieve economies of scale;

 

  (vi)

potential litigation relating to the mergers that could be instituted against Xperi, TiVo or their respective directors;

 

  (vii)

the risk that disruptions from the mergers will harm Xperi’s or TiVo’s business, including current plans and operations;

 

  (viii)

the ability of Xperi or TiVo to retain and hire key personnel;

 

  (ix)

potential adverse reactions or changes to business relationships resulting from the announcement or completion of the mergers;

 

  (x)

uncertainty as to the long-term value of shares of HoldCo common stock;

 

  (xi)

legislative, regulatory and economic developments affecting Xperi’s and TiVo’s businesses;

 

  (xii)

general economic and market developments and conditions;

 

  (xiii)

the evolving legal, regulatory and tax regimes under which Xperi and TiVo operate;

 

  (xiv)

potential business uncertainty, including changes to existing business relationships, during the pendency of the mergers that could affect Xperi’s and/or TiVo’s financial performance;

 

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  (xv)

certain restrictions during the pendency of the mergers that may impact Xperi’s or TiVo’s ability to pursue certain business opportunities or strategic transactions;

 

  (xvi)

unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, natural disasters, the outbreak of coronavirus or similar outbreaks or pandemics, and their effects on economic and business environments in which Xperi and TiVo operate, as well as Xperi’s and TiVo’s response to any of the aforementioned factors; and

 

  (xvii)

failure to receive the approval of the stockholders of Xperi and/or TiVo.

For any forward-looking statements made in this joint proxy statement/prospectus or in any documents incorporated by reference into this joint proxy statement/prospectus, Xperi and TiVo claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus or the dates of the documents incorporated by reference in this joint proxy statement/prospectus. Except as required by applicable law, neither Xperi nor TiVo undertakes to update these forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made. In the event that a party does update any forward-looking statement, no inference should be made that the parties will make additional updates with respect to that statement, related matters or any other forward-looking statements.

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the reports that Xperi and TiVo have filed with the SEC as described under “Where You Can Find More Information” beginning on page 211.

We expressly qualify in their entirety all forward-looking statements attributable to either of us or any person acting on our behalf by the cautionary statements contained or referred to in this joint proxy statement/prospectus.

 

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QUESTIONS AND ANSWERS

The following are some questions that you, as a stockholder of Xperi Corporation, which we refer to as Xperi, and/or a stockholder of TiVo Corporation, which we refer to as TiVo, may have regarding the mergers and the other matters being considered at the special meetings as well as the answers to those questions. Xperi and TiVo (which we refer to, collectively, as “we”) urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the mergers and the other matters being considered at the special meetings. Additional important information is also contained in the annexes to and the documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 211.

About the Mergers

 

Q:

What is the proposed transaction on which I am being asked to vote?

 

A:

Xperi and TiVo have agreed to the strategic combination of Xperi and TiVo under the terms of a merger agreement that is described in this joint proxy statement/prospectus. Subject to the terms and conditions of the merger agreement, (i) Xperi Merger Sub, a Delaware corporation that was formed on December 17, 2019, as a wholly owned subsidiary of HoldCo, will be merged with and into Xperi, with Xperi surviving the merger as a subsidiary of HoldCo, which we refer to as the Xperi merger, and (ii) TiVo Merger Sub, a Delaware corporation that was formed on December 17, 2019, as a wholly owned subsidiary of HoldCo, will be merged with and into TiVo, with TiVo surviving as a subsidiary of HoldCo, which we refer to as the TiVo merger, together with the Xperi merger, which we refer to as the mergers. As a result of the mergers, among other things, (a) HoldCo will become the ultimate parent of Xperi, TiVo and their respective subsidiaries and (b) existing Xperi stockholders and TiVo stockholders will receive HoldCo common stock, in accordance with the terms of the merger agreement and as described further in this joint proxy statement/prospectus.

Following the mergers, Xperi common stock and TiVo common stock will be delisted from the Nasdaq Stock Market, LLC, which we refer to as Nasdaq, and their respective common stock will be deregistered under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. The shares of HoldCo common stock will be listed for trading on Nasdaq upon the closing.

 

Q:

Why is stockholder approval necessary and who is entitled to vote?

 

A:

This joint proxy statement/prospectus serves as the proxy statement through which Xperi and TiVo will solicit proxies to obtain the necessary stockholder approvals for the proposed mergers. It also serves as the prospectus by which HoldCo will issue shares of its common stock as consideration in the Xperi merger and the TiVo merger.

Xperi is holding a special meeting of stockholders, which we refer to as the Xperi special meeting, in order to obtain the stockholder approval necessary to adopt the merger agreement. Xperi stockholders will also be asked to approve the adjournment of the Xperi special meeting (if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the merger agreement) and to approve, by non-binding advisory vote, the compensation arrangements for Xperi’s named executive officers in connection with the mergers.

TiVo is holding a special meeting of stockholders, which we refer to as the TiVo special meeting, and together with the Xperi special meeting, which we refer to as the special meetings, in order to obtain the stockholder approval necessary to adopt the merger agreement. TiVo stockholders will also be asked to approve the adjournment of the TiVo special meeting (if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the merger agreement) and to approve, by non-binding advisory vote, the compensation arrangements for TiVo’s named executive officers in connection with the mergers.

 

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We will be unable to complete the mergers unless, among other things, both the Xperi stockholders and the TiVo stockholders vote to adopt the merger agreement.

You are receiving this joint proxy statement/prospectus because you were a holder of record of Xperi common stock and/or TiVo common stock as of the close of business on the record date for the Xperi special meeting or the TiVo special meeting, as applicable, and are therefore entitled to vote at the Xperi special meeting and/or TiVo special meeting.

This joint proxy statement/prospectus contains important information about the mergers, the merger agreement (a copy of which is attached as Annex A) and the special meetings. You should read this information carefully and in its entirety. The enclosed voting materials allow you to vote your shares without attending the Xperi special meeting or the TiVo special meeting, as applicable. Your vote is very important and we encourage you to submit your proxy as soon as possible.

 

Q:

What will Xperi stockholders receive in the mergers?

 

A:

If the mergers are completed, Xperi stockholders will be entitled to receive one (1) (which we refer to as the Xperi exchange ratio) share of HoldCo common stock for each share of Xperi common stock they hold at the effective time, which we refer to as the Xperi merger consideration.

 

Q:

What will TiVo stockholders receive in the mergers?

 

A:

If the mergers are completed, TiVo stockholders will be entitled to receive 0.455 (which we refer to as the TiVo exchange ratio) shares of HoldCo common stock for each share of TiVo common stock held at the effective time, together with cash in lieu of any fractional shares of HoldCo common stock, which we refer to as the TiVo merger consideration. TiVo stockholders will not receive any fractional shares of HoldCo common stock in the mergers. Instead, TiVo stockholders will receive cash in lieu of any fractional shares of HoldCo common stock that they would otherwise have been entitled to receive.

 

Q:

What equity stake will former Xperi stockholders and former TiVo stockholders hold in HoldCo?

 

A:

Under the merger agreement and pursuant to the Xperi exchange ratio and TiVo exchange ratio, it is expected that Xperi stockholders will own approximately 46.5% of HoldCo common stock and TiVo stockholders will own approximately 53.5% of HoldCo common stock immediately following the effective time. The merger agreement further provides that, in the event outstanding shares of Xperi common stock or TiVo common stock are changed into a different number of shares by reason of a reclassification, recapitalization, split-up, combination, exchange of shares, dividend payable in stock or other securities or other similar transaction, the Xperi exchange ratio and TiVo exchange ratio will be adjusted to provide holders of Xperi common stock and TiVo common stock or Xperi equity awards and TiVo equity awards with the same economic effect contemplated by the foregoing prior to such change.

 

Q:

How do I calculate the value of the Xperi merger consideration and the TiVo merger consideration?

 

A:

The merger agreement does not contain any provision that would adjust the Xperi exchange ratio or TiVo exchange ratio based on fluctuations in the market value of either the Xperi common stock or TiVo common stock. Because of this, the implied value of consideration to the Xperi and TiVo stockholders may fluctuate between now and the completion of the mergers. The value of the consideration to Xperi and TiVo stockholders will depend on the market value of HoldCo common stock at the time the mergers are completed, which will in turn be affected by the market value of Xperi common stock and TiVo common stock at the time the mergers are completed.

On December 18, 2019, the last trading day prior to the public announcement of the proposed mergers, the closing price on Nasdaq was $20.94 per share of Xperi common stock and $7.89 per share of TiVo common

 

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stock. On March 23, 2020, the latest practicable date prior to filing this joint proxy statement/prospectus, the closing price on Nasdaq was $11.46 per share of Xperi common stock and $6.03 per share of TiVo common stock. We urge you to obtain current market quotations before voting your shares.

 

Q:

What do I need to do now to receive the merger consideration?

 

A:

Xperi stockholders and TiVo stockholders should keep any share certificates they hold at this time. After the mergers are completed, Xperi stockholders and TiVo stockholders will each receive from the exchange agent a letter of transmittal and instructions on how to surrender their share certificates in exchange for the Xperi merger consideration or the TiVo merger consideration, as applicable.

 

Q:

Who is the exchange agent for the mergers?

 

A:

Computershare Trust Company, N.A., is the exchange agent, and has been mutually designated by Xperi and TiVo.

 

Q:

When do you expect the mergers to be completed?

 

A:

Xperi and TiVo intend to complete the mergers as soon as reasonably practicable and are currently targeting completion of the mergers during the second quarter of 2020. However, the mergers are subject to regulatory approvals and clearances and other conditions, and it is possible that factors outside the control of both companies could result in the mergers being completed at a later time, or not at all. There may be a substantial amount of time between the respective special meetings and the completion of the mergers. For additional information on the regulatory approvals and clearances required to complete the mergers, see the section entitled “Adoption of the Merger Agreement—Regulatory Approvals” beginning on page 119.

For additional information on the conditions to completion of the mergers, see the section entitled “Adoption of the Merger Agreement—The Merger Agreement—Conditions to Completion of the Mergers” beginning on page 149.

 

Q:

What effects will the mergers have on Xperi and TiVo?

 

A:

Upon completion of the mergers, Xperi and TiVo will cease to have their common stock traded publicly. Xperi Merger Sub will merge with and into Xperi, with Xperi surviving the merger as a subsidiary of HoldCo. TiVo Merger Sub will merge with and into TiVo, with TiVo surviving the merger as a subsidiary of HoldCo. As a result of the mergers, you will own shares in HoldCo and will not directly own any shares of Xperi and/or TiVo. Following completion of the mergers, the registration of the Xperi common stock and TiVo common stock and the respective reporting obligations of Xperi and TiVo with respect to their common stock under the Exchange Act will be terminated. In addition, upon completion of the mergers, shares of Xperi common stock and TiVo common stock will no longer be listed on Nasdaq or any other stock exchange or quotation system. Although you will no longer be a stockholder of Xperi and/or TiVo, as applicable, you will have an indirect interest in both Xperi and TiVo through your ownership of HoldCo common stock. If you become a HoldCo stockholder, you can expect that the value of your investment will depend, among other things, on the performance of both Xperi and TiVo and HoldCo’s ability to integrate the two companies.

 

Q:

What effects will the mergers have on HoldCo?

 

A:

Upon completion of the mergers, HoldCo will become the holding company of Xperi and TiVo. As a condition to closing, the shares of HoldCo common stock to be issued in connection with the mergers must be approved for listing on Nasdaq.

 

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Q:

What are the conditions to the completion of the mergers?

 

A:

In addition to the adoption of the merger agreement by the Xperi stockholders and by the TiVo stockholders, completion of the mergers is subject to the satisfaction of a number of other conditions, including:

 

   

the termination or expiration of any applicable waiting period under the HSR Act;

 

   

the absence of certain governmental restraints or prohibitions preventing the consummation of the mergers;

 

   

the receipt of a tax opinion by each of Xperi and TiVo from their respective counsels to the effect that each of the mergers will qualify as a “reorganization” within the meaning of Section 368(a) of the Code or, alternatively, as a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code;

 

   

the effectiveness of the registration statement of which this joint proxy statement/prospectus forms a part and the absence of any stop order or proceeding seeking a stop order; and

 

   

the approval for listing by Nasdaq of the HoldCo common stock to be issued in connection with the mergers, subject to official notice of issuance.

For additional information on the regulatory approvals and clearances required to complete the mergers, see the section entitled “Adoption of the Merger Agreement—Regulatory Approvals” beginning on page 119. For additional information on the conditions to completion of the mergers, see the section entitled “Adoption of the Merger Agreement—The Merger Agreement—Conditions to Completion of the Mergers” beginning on page 149.

 

Q:

What is the contemplated business separation?

 

A:

Although there is no current plan or intention to separate any parts of the combined company, Xperi and TiVo currently contemplate that, at some point following the consummation of the mergers and likely no earlier than the first quarter of 2021, the combined company may pursue, subject to the receipt of approval by the HoldCo board and any required regulatory approvals, a separation of the combined company’s product business and IP licensing business through a tax-efficient transaction, resulting in two independent, publicly traded companies. Xperi and TiVo currently anticipate that any contemplated business separation transaction, if undertaken, will be consummated in the form of a pro-rata spin-off transaction intended to qualify as tax-free under Section 355 of the Code, in which HoldCo stockholders, at such time, would receive shares of capital stock in the resulting spin-off company. For more information regarding any contemplated business separation, see the section entitled “—The Adoption of the Merger Agreement—Contemplated Business Separation” beginning on page 44.

 

Q:

Are the mergers conditioned on the determination to proceed with any contemplated business separation?

 

A:

No. The consummation of the mergers is not conditioned on the determination to proceed with any contemplated business separation transaction and such determination to proceed with any contemplated business separation will only be made after consummation of the mergers. The HoldCo board may, at any time prior to the consummation of any contemplated business separation, determine to abandon such transaction, and no assurance can be given that any such or similar transaction will occur. For a further discussion of the risks related to any contemplated business separation transaction, see “Risk Factors—Risks Related to the Combined Company” beginning on page 35.

 

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Q:

Will I still be paid dividends prior to the mergers?

 

A:

Under the merger agreement, Xperi may continue to declare and pay its regular quarterly cash dividends to its stockholders in accordance with its existing distribution policies, without TiVo’s consent. Xperi’s dividend in any quarter cannot exceed $0.20 per share of Xperi common stock without TiVo’s consent. TiVo may not declare or pay any dividends to its stockholders without Xperi’s consent.

 

Q:

Will I still be paid dividends after the mergers?

 

A:

The amounts of dividends, if any, that are declared or paid to HoldCo stockholders cannot yet be determined and depends on a number of factors. The HoldCo board will have sole discretion to determine whether any dividends will be declared, when dividends, if any, are declared, and the amounts of such dividends. We expect that such determination would be based on a number of considerations, including, but not limited to, HoldCo’s results of operations, capital management plans, the market price of HoldCo common stock, the combined company’s access to capital markets, as well as legal requirements, industry practice and other factors deemed relevant by the HoldCo board. There can be no guarantee that HoldCo stockholders will receive or be entitled to dividends commensurate with the historical dividends of Xperi or TiVo. For a further discussion of the risks related to the payment of dividends after the mergers, see “Risk Factors—Risks Related to the Mergers” beginning on page 26.

 

Q:

What will happen to outstanding Xperi equity awards in the mergers?

 

A:

Each outstanding Xperi stock option, whether vested or unvested, will be automatically converted at the effective time into an option to purchase, on the same terms and conditions (including any applicable vesting and exercisability requirements) as were applicable to such Xperi stock option immediately prior to the effective time, one (1) share of HoldCo common stock, at an exercise price per share (rounded up to the nearest whole cent) equal to the per-share exercise price of the Xperi stock option by the Xperi exchange ratio.

Each outstanding Xperi restricted stock unit award, whether vested or unvested, which we refer to as an Xperi RSU award, will be automatically converted at the effective time into one (1) HoldCo restricted stock unit award, which we refer to as a HoldCo RSU award, on the same terms and conditions (including any applicable vesting and settlement requirements) as were applicable to such Xperi RSU award immediately prior to the effective time.

Each Xperi RSU award that is subject to performance-vesting based on the achievement of performance metrics immediately prior to the effective time, which we refer to as an Xperi PSU award, will be automatically converted at the effective time into one (1) HoldCo RSU award, on the same terms and conditions (including any applicable performance-based vesting criteria and settlement requirements) as were applicable to such Xperi PSU award immediately prior to the effective time, except as described in the sections of this joint proxy statement entitled “Adoption of the Merger Agreement—Interests of Xperi Directors and Executive Officers in the Mergers—Treatment of Xperi PSU Awards held by Jon Kirchner” beginning on page 76 and “Adoption of the Merger Agreement—Interests of Xperi Directors and Executive Officers in the Mergers—Treatment of Xperi PSU Awards held by Murali Dharan” beginning on page 76.

 

Q:

What will happen to outstanding TiVo equity awards in the mergers?

 

A:

Each outstanding TiVo stock option, whether vested or unvested, will be automatically converted at the effective time into an option to purchase, on the same terms and conditions (including any applicable vesting and exercisability requirements) as were applicable to such TiVo stock option immediately prior to the effective time, the number of shares of HoldCo common stock (rounded down to the nearest whole share) determined by multiplying the number of shares of TiVo common stock subject to the TiVo stock option by the TiVo exchange ratio, at an exercise price per share (rounded up to the nearest whole cent) determined by dividing the per-share exercise price of the TiVo stock option by the TiVo exchange ratio.

 

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Each outstanding TiVo restricted stock unit award, whether vested or unvested, which we refer to as a TiVo RSU award, will be automatically converted at the effective time into one (1) HoldCo RSU award, on the same terms and conditions (including any applicable vesting and settlement requirements) as were applicable to such TiVo RSU award immediately prior to the effective time, with respect to the number of shares of HoldCo common stock (rounded down to the nearest whole share) determined by multiplying the number of shares of TiVo common stock subject to the TiVo RSU award by the TiVo exchange ratio.

Under the terms of performance restricted stock unit awards granted by TiVo to its executive officers, which we refer to as TiVo PSUs, performance against the TSR performance metrics will be measured as of the consummation of the mergers, with the ending share price for purposes of the performance period being calculated based on the 30-trading day average closing share price immediately prior to and including the date of consummation of the mergers. Any TiVo PSUs that are deliverable based on this measurement will vest on the consummation date on a pro rata basis (based on the portion of the performance period during which services were performed). Any remaining TiVo PSUs that are deliverable based on this measurement and that did not vest upon consummation of the mergers will vest ratably following the date of consummation of the mergers through the earlier of the first regularly scheduled compensation committee meeting following the end of the performance period or June 1, 2021 (for awards granted in 2018) and June 1, 2022 (for awards granted in 2019).

In addition, certain TiVo RSU awards which vest only upon certain liquidity events will vest upon the consummation of the mergers.

 

Q:

What will happen to the Xperi Employee Stock Purchase Plans?

 

A:

Each of the Xperi Amended and Restated Employee Stock Purchase Plan and the Xperi Second Amended and Restated International Employee Stock Purchase Plan, which we refer to as the Xperi ESPPs will, subject to the consummation of the mergers, terminate effective immediately prior to the effective time. The merger agreement, as amended, provides that any offering period under the Xperi ESPPs will terminate and all options to purchase shares of Xperi common stock under the Xperi ESPPs will be automatically exercised on the earlier to occur of the day that is four (4) trading days before the effective time or the date on which such offering period would otherwise end.

 

Q:

What will happen to the TiVo Employee Stock Purchase Plan?

 

A:

The Rovi 2008 Employee Stock Purchase Plan, which we refer to as the TiVo ESPP, will, subject to the consummation of the mergers, terminate effective immediately prior to the effective time. The merger agreement, as amended, provides that any offering period under the TiVo ESPP will terminate and all options to purchase shares of TiVo common stock under the TiVo ESPP will be automatically exercised on the earlier to occur of the day that is four (4) trading days before the effective time or the date on which such offering period would otherwise end.

 

Q:

Are there any risks in the mergers that I should consider?

 

A:

Yes. There are risks associated with all mergers, including those associated with the Xperi merger and the TiVo merger. These risks are discussed in more detail in the section entitled “Risk Factors” beginning on page 26 and you should also refer to the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page iv.

 

Q:

Are Xperi stockholders entitled to appraisal rights?

 

A:

No. Under the DGCL, Xperi stockholders are not entitled to appraisal rights in connection with the Xperi merger.

 

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Q:

Are TiVo stockholders entitled to appraisal rights?

 

A:

No. Under the DGCL, TiVo stockholders are not entitled to appraisal rights in connection with the TiVo merger.

 

Q:

What are the U.S. federal income tax consequences of the mergers to U.S. holders of shares of Xperi common stock and shares of TiVo common stock?

 

A:

It is anticipated that the Xperi merger and the TiVo merger will each qualify as a “reorganization” within the meaning of Section 368(a) of the Code, or as a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code. It is a condition to Xperi’s obligation to complete the Xperi merger that Xperi receive an opinion from Skadden, dated the effective date of the mergers, to the effect that the Xperi merger and the TiVo merger will each qualify as a “reorganization” within the meaning of Section 368(a) of the Code or, alternatively, as a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code. It is a condition to TiVo’s obligation to complete the TiVo merger that TiVo receive an opinion from Cooley, dated the effective date of the mergers, to the effect that the Xperi merger and the TiVo merger will each qualify as a “reorganization” within the meaning of Section 368(a) of the Code or, alternatively, as a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code. Based on the tax opinion representations and assumptions (as defined on page 130), in the opinion of Skadden and Cooley, the Xperi merger and the TiVo merger will each qualify as a “reorganization” within the meaning of Section 368(a) of the Code or as a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code. Accordingly, a U.S. holder (as defined on page 129) of Xperi common stock or TiVo common stock will recognize no gain or loss for U.S. federal income tax purposes upon the exchange of shares of Xperi common stock or TiVo common stock for shares of HoldCo common stock in the Xperi merger or the TiVo merger, respectively, except with respect to cash received by TiVo stockholders in lieu of fractional shares. If any of the tax opinion representations and assumptions are incorrect, incomplete or inaccurate or is violated, the validity of the opinions described above may be affected and the tax consequences of the mergers could differ from those described in this joint proxy statement/prospectus.

Please carefully review the information set forth in the section entitled “Adoption of the Merger Agreement—Material U.S. Federal Income Tax Consequences of the Mergers” beginning on page 129 for a discussion of the material U.S. federal income tax consequences of the mergers. Please consult your own tax advisors as to the specific U.S. federal, state or local or foreign income or other tax consequences to you of the mergers.

About the Xperi Special Meeting

 

Q:

When and where will the special meetings be held?

 

A:

Subject to the below, the Xperi special meeting will be held at [●] on [●], 2020, at [●], local time.

Due to concerns about the coronavirus or COVID-19 and to assist in protecting the public health and well-being of Xperi’s stockholders and employees, Xperi is planning for the possibility that the Xperi special meeting may be held solely by means of remote communication (i.e., a virtual-only meeting). If Xperi takes this step, Xperi will publicly announce, as soon as practicable prior to the Xperi special meeting, the decision in a press release and post additional information on Xperi’s investor relations website at investor.xperi.com. We recommend that you monitor this website for updated information, and please check the website in advance of the Xperi special meeting date if you are planning to attend in person.

 

Q:

Who is entitled to vote at the special meetings?

 

A:

Only holders of record of Xperi common stock at the close of business on April 13, 2020, the record date for voting at the Xperi special meeting, are entitled to vote at the Xperi special meeting.

 

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Q:

How can I attend the Xperi special meeting?

 

A:

All Xperi stockholders are invited to attend the Xperi special meeting. Registered stockholders may be admitted to the meeting upon providing picture identification. If you own Xperi shares in street name (i.e., your shares are held in street name through a broker, bank, trustee or other nominee), please bring your most recent brokerage statement, along with picture identification, to the meeting. Xperi will use your brokerage statement to verify your ownership of Xperi common stock and admit you to the meeting.

Please note that cameras, sound or video recording equipment, or other similar equipment, electronic devices, large bags or packages will not be permitted in the Xperi special meeting.

Due to concerns about the coronavirus or COVID-19 and to assist in protecting the public health and well-being of Xperi’s stockholders and employees, Xperi is planning for the possibility that the Xperi special meeting may be held solely by means of remote communication (i.e., a virtual-only meeting). As a result, there may be additional procedures in connection with such virtual-only meeting. If Xperi takes this step, Xperi will publicly announce, as soon as practicable prior to the Xperi special meeting, the decision in a press release and post additional information on Xperi’s investor relations website at investor.xperi.com on how to participate. We recommend that you monitor this website for updated information. We encourage you to vote your shares prior to the Xperi special meeting, even if you plan to attend the meeting.

 

Q:

What proposals will be considered at the Xperi special meeting?

 

A:

At the Xperi special meeting, Xperi stockholders will be asked to consider and vote on (i) a proposal to adopt the merger agreement, which we refer to as the Xperi merger proposal, (ii) a proposal to adjourn the Xperi special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the Xperi merger proposal, which we refer to as the Xperi adjournment proposal and (iii) a non-binding, advisory proposal to approve the compensation that may become payable to Xperi’s named executive officers in connection with the consummation of the mergers, which we refer to as the Xperi compensation proposal. Xperi will transact no other business at its special meeting except such business as may properly be brought before the Xperi special meeting or any adjournment or postponement thereof.

 

Q:

How does the Xperi board of directors recommend that I vote?

 

A:

The Xperi board approved the merger agreement and determined that the merger agreement and the transactions contemplated thereby, including the Xperi merger, are advisable and fair to, and in the best interests of, Xperi and its stockholders.

Xperi’s directors and current and certain former executive officers have financial interests in the mergers that may be different from, or in addition to, those of Xperi stockholders generally, as discussed in more detail in the section entitled “Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Interests of Xperi Directors and Executive Officers in the Mergers” beginning on page 75.

The Xperi board recommends that the Xperi stockholders vote:

 

   

FOR” the Xperi merger proposal;

 

   

FOR” the Xperi adjournment proposal; and

 

   

FOR” the Xperi compensation proposal.

 

Q:

How do I vote?

 

A:

If you are a holder of record of Xperi common stock as of the close of business on the record date for the Xperi special meeting, you may vote in person by attending the applicable special meeting or, to ensure your shares are represented at the applicable meeting, you may vote by:

 

   

accessing the Internet website as specified on your proxy card;

 

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calling the toll-free number specified on your proxy card; or

 

   

marking, signing, dating and returning the proxy card in the postage-paid envelope provided.

If your shares are held in street name, through a broker, bank, trustee or other nominee, please follow the instructions on a voting instruction card furnished by the record holder.

 

Q:

What is a “broker non-vote?”

 

A:

Under stock exchange rules, banks, brokers and other nominees may use their discretion to vote “uninstructed” shares (i.e., shares held of record held by banks, brokers or other nominees but with respect to which the beneficial owner of such shares has not provided instructions on how to vote on a particular proposal) with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. “Non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation) and certain corporate governance proposals, even if management-supported. A “broker non-vote” occurs on an item when (i) a broker, nominee or intermediary has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other proposals without instructions from the beneficial owner of the shares and (ii) the beneficial owner fails to provide the broker, nominee or intermediary with such instructions. Because none of the proposals to be voted on at the Xperi special meeting are routine matters for which brokers may have discretionary authority to vote, Xperi does not expect there to be any broker non-votes at the Xperi special meeting.

 

Q:

What vote is required to approve each Xperi proposal?

 

A:

Proposal 1: To Adopt the Merger Agreement by Xperi Stockholders. Approving the Xperi merger proposal requires the affirmative vote of holders of a majority of all outstanding shares of the Xperi common stock entitled to vote on the Xperi merger proposal. Accordingly, an Xperi stockholder’s failure to submit a proxy card or to vote in person at the Xperi special meeting, an abstention from voting, or a broker non-vote, if any, will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.

Proposal 2: To Adjourn the Xperi Special Meeting by Xperi Stockholders. Approving the Xperi adjournment proposal (if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the merger agreement) requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on the Xperi adjournment proposal. Accordingly, abstentions will have the same effect as a vote “AGAINST” the Xperi adjournment proposal, and broker non-votes (which are not considered votes cast), if any, and shares held by Xperi stockholders not in attendance at, and who have not submitted a proxy for, the Xperi special meeting, will have no effect on the outcome of any vote on the Xperi adjournment proposal, assuming a quorum is present.

Proposal 3: Regarding Certain Xperi Merger-Related Executive Compensation Arrangements. In accordance with Section 14A of the Exchange Act, Xperi is providing stockholders with the opportunity to approve, by non-binding advisory vote, compensation payments for Xperi’s named executive officers in connection with the mergers, as reported in the section of this joint proxy statement/prospectus entitled “Advisory (Non-Binding) Vote on Compensation” beginning on page 157. Approving the Xperi compensation proposal, on a non-binding advisory basis, requires that the affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on the Xperi compensation proposal. Accordingly, abstentions will have the same effect as a vote “AGAINST” the Xperi compensation proposal, and broker non-votes (which are not considered votes cast), if any, and shares held by Xperi stockholders not in attendance at, and who have not submitted a proxy for, the Xperi special meeting, will have no effect on the outcome of any vote to approve, on a non-binding advisory basis, the Xperi compensation proposal, assuming a quorum is present.

 

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Q:

How many votes do I have?

 

A:

You are entitled to cast one (1) vote for each share of Xperi common stock that you owned as of the close of business on the record date for the Xperi special meeting. As of the close of business on the record date for the Xperi special meeting, there were [●] shares of Xperi common stock outstanding entitled to vote at the Xperi special meeting.

 

Q:

What will happen if I fail to vote or I abstain from voting?

 

A:

Proposal 1: To Adopt the Merger Agreement by Xperi Stockholders. Abstentions and failures to vote or to instruct a broker or other nominee to vote with respect to the Xperi merger proposal will have the same effect as a vote “AGAINST” the proposal.

Proposal 2: To Adjourn the Xperi Special Meeting by Xperi Stockholders. Abstentions will have the same effect as a vote “AGAINST” the Xperi adjournment proposal. Failures to vote or the failure to instruct a broker or other nominee to vote with respect to the Xperi adjournment proposal do not constitute a vote “FOR” or “AGAINST” the proposal and will be disregarded in the calculation of “votes cast.”

Proposal 3: Regarding Certain Xperi Merger-Related Executive Compensation Arrangements. Abstentions will have the same effect as a vote “AGAINST” the Xperi compensation proposal. Failures to vote or the failure to instruct a broker or other nominee to vote with respect to the Xperi compensation proposal do not constitute a vote “FOR” or “AGAINST” the proposal and will be disregarded in the calculation of “votes cast.”

 

Q:

What constitutes a quorum?

 

A:

The holders of a majority of the Xperi stock issued and outstanding and entitled to vote at the Xperi special meeting, present in person or represented by proxy, constitute a quorum. Shares of Xperi common stock that are represented at the Xperi special meeting and are entitled to vote but not voted, including Xperi shares for which a stockholder directs an “abstention” from voting, will be counted as present for purposes of establishing a quorum. However, broker non-votes, if any, will not be included to establish a quorum.

 

Q:

If my shares are held in “street name” by my broker, will my broker automatically vote my shares for me?

 

A:

No. If you hold your shares in a stock brokerage account or if your shares are held by a bank or nominee, that is, in “street name,” your broker, bank, trust company or other nominee cannot vote your shares on “non-routine” matters without instructions from you. You should instruct your broker, bank, trust company or other nominee as to how to vote your shares, following the directions provided by your broker, bank, trust company or other nominee to you. Please check the voting form used by your broker, bank, trust company or other nominee.

If you are an Xperi stockholder and you do not provide your broker, bank, trust company or other nominee with instructions and your broker, bank, trust company or other nominee submits an unvoted proxy, your shares of Xperi common stock will not be counted for purposes of determining a quorum at the Xperi special meeting or voted on any proposal on which your broker, bank, trust company or other nominee does not have discretionary authority.

 

Q:

What will happen if I return my proxy card without indicating how to vote?

 

A:

If you are a registered holder of record and you return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by that proxy as recommended by the Xperi board.

 

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Please note that you may not vote shares held in street name by returning a proxy card directly to Xperi, or by voting in person at your special meeting unless you provide a “legal proxy,” which you must obtain from your broker, bank, trust company or other nominee.

If you are an Xperi stockholder and you do not instruct your broker on how to vote your Xperi shares, your broker may not vote your Xperi shares, which will have the same effect as a vote “AGAINST” the Xperi merger proposal but will have no effect on the Xperi adjournment proposal or the Xperi compensation proposal, assuming a quorum is present.

 

Q:

Can I change my vote after I have returned a proxy or voting instruction card?

 

A:

Yes. You can change your vote at any time before your proxy is voted at the Xperi special meeting.

If you are a registered holder of record you can change your vote or revoke your proxy at any time before it is exercised at the Xperi special meeting by doing any of the following:

 

   

you can send a completed proxy card bearing a later date than your original proxy card and mailing it so that it is received prior to the Xperi special meeting;

 

   

you can send a notice of revocation to the Xperi Corporate Secretary, dated as of a later date than the date of the proxy and received prior to the Xperi special meeting;

 

   

you can log on to the Internet website specified on your proxy card as you would to submit your proxy electronically or by calling the telephone number specified on your proxy card, in each case following the instructions on your proxy card and to the extent you are eligible to do so; or

 

   

you can attend the Xperi special meeting and vote in person if you have provided notice to the Xperi Corporate Secretary prior to the Xperi special meeting.

If you hold your shares in street name through a broker, bank or other nominee holder of record, you must contact your broker, bank or other nominee holder of record to change your vote or obtain a written legal proxy to vote your shares if you wish to cast your vote in person at the Xperi special meeting.

Your attendance alone will not revoke any proxy that you have previously given or change your vote.

 

Q:

What happens if I transfer my shares of Xperi common stock before the special meeting?

 

A:

The record date for the Xperi special meeting is earlier than the date of the Xperi special meeting and the date that the mergers are expected to be completed. If you transfer your Xperi shares after the record date but before the Xperi special meeting, you will retain your right to vote at the Xperi special meeting. However, in order to receive the Xperi merger consideration you must hold your shares of Xperi common stock through the completion of the mergers.

 

Q:

What if I hold shares in both Xperi and TiVo?

 

A:

If you are both an Xperi stockholder and a TiVo stockholder, you will receive two separate packages of proxy materials. A vote cast as an Xperi stockholder will not count as a vote cast as a TiVo stockholder, and a vote cast as a TiVo stockholder will not count as a vote cast as an Xperi stockholder. Therefore, please separately submit a proxy for each of your Xperi and TiVo shares.

 

Q:

Who is the inspector of election?

 

A:

The Xperi board has appointed a representative of Broadridge Financial Solutions, Inc. to act as the inspector of election at the Xperi special meeting.

 

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Q:

Where can I find the voting results of the special meeting?

 

A:

The preliminary voting results are expected to be announced at the Xperi special meeting. In addition, within four (4) business days following the Xperi special meeting, Xperi intends to file the final voting results of its special meeting with the SEC on Form 8-K.

 

Q:

What will happen if all of the proposals to be considered at the special meetings are not approved?

 

A:

As a condition to the completion of the mergers, Xperi stockholders must approve the Xperi merger and TiVo stockholders must approve the TiVo merger. Completion of the mergers is not conditioned or dependent on approval of any of the other proposals to be considered at the special meetings. Under specified circumstances, Xperi or TiVo may be required to pay to, or be entitled to receive from, the other party a fee with respect to termination of the merger agreement, see “Adoption of the Merger Agreement—The Merger Agreement—Expenses and Termination Fees” beginning on page 152.

 

Q:

Why are Xperi stockholders being asked to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to Xperi’s named executive officers in connection with the completion of the mergers?

 

A:

The rules promulgated by the SEC under Section 14A of the Exchange Act require Xperi to seek a non-binding, advisory vote with respect to certain compensation that may be paid or become payable to Xperi’s named executive officers in connection with the mergers. For more information regarding such payments, see the section entitled “Advisory (Non-Binding) Vote on Compensation” beginning on page 157.

 

Q:

What will happen if Xperi stockholders or TiVo stockholders do not approve, on a non-binding advisory basis, the payments to Xperi’s and TiVo’s named executive officers in connection with the completion of the mergers?

 

A:

The votes on the Xperi compensation proposal and the TiVo compensation proposal are votes separate and apart from the votes on the Xperi merger proposal and the TiVo merger proposal. Accordingly, Xperi stockholders may vote in favor of the Xperi merger proposal and not in favor of the Xperi compensation proposal, or vice versa. Approval of the Xperi compensation proposal is not a condition to consummation of the mergers, and it is advisory in nature only, meaning it will not be binding on Xperi, TiVo or HoldCo. Likewise, TiVo stockholders may vote in favor of the TiVo merger proposal and not in favor of the TiVo compensation proposal, or vice versa. Approval of the TiVo compensation proposal is not a condition to consummation of the mergers, and it is advisory in nature only, meaning it will not be binding on Xperi, TiVo or HoldCo.

 

Q:

What do I need to do now?

 

A:

Carefully read and consider the information contained in and incorporated by reference into this joint proxy statement/prospectus, including its annexes.

If you are a holder of record, in order for your shares to be represented at your special meeting, you must:

 

   

attend your special meeting in person;

 

   

vote through the Internet or by telephone by following the instructions included on your proxy card; or

 

   

indicate on the enclosed proxy card how you would like to vote and return the proxy card in the accompanying pre-addressed postage paid envelope.

If you hold your shares in street name, in order for your shares to be represented at your special meeting, you should instruct your broker, bank, trust company or other nominee as to how to vote your shares, following the directions provided to you by your broker, bank, trust company or other nominee.

 

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Q:

Who can help answer my questions?

 

A:

Xperi stockholders who have questions about the merger agreement, the mergers or the other matters to be voted on at the special meetings, who need assistance submitting their proxy or voting shares or who desire additional copies of this joint proxy statement/prospectus or additional proxy cards should contact:

Alliance Advisors

200 Broadacres Drive, 3rd Floor

Bloomfield, New Jersey 07003

Toll Free: (800) 574-6109

About the TiVo Special Meeting

 

Q:

When and where will the special meeting be held?

 

A:

The TiVo special meeting will be held virtually via live audio-only webcast at www.virtualshareholdermeeting.com/TIVO2020 on [●], 2020 at [●] Pacific Time. Online check-in will begin at [●] Pacific Time and you should allow ample time for the check-in procedures. You will be able to vote your shares electronically by Internet and submit questions online during the TiVo special meeting by logging in to the website listed above using the 16-digit control number included in your proxy card.

 

Q:

Who is entitled to vote at the special meetings?

 

A:

Only holders of record of TiVo common stock at the close of business on [●], the record date for voting at the TiVo special meeting, are entitled to vote at the TiVo special meeting.

 

Q:

How can I attend the TiVo special meeting?

 

A:

The TiVo special meeting will be held entirely online due to the public health concerns regarding the coronavirus pandemic. You will not be able to attend the TiVo special meeting in person. The meeting will be held virtually on [●], 2020 at [●] Pacific Time via live audio-only webcast at www.virtualshareholdermeeting.com/TIVO2020. To attend the meeting, you will need the 16-digit control number included in your proxy card. Online check-in will begin at [●] Pacific Time and you should allow ample time for the check-in procedures.

The virtual meeting has been designed to provide the same rights to participate as you would have at an in-person meeting. Information on how to vote by Internet before and during the TiVo special meeting is discussed below.

 

Q:

How do I ask questions at the TiVo special meeting?

 

A:

Our virtual TiVo special meeting allows stockholders to submit questions during the TiVo special meeting in the question box provided at www.virtualshareholdermeeting.com/TIVO2020. We will respond to as many inquiries at the TiVo special meeting as time allows.

 

Q:

What if during the check-in time or during the TiVo special meeting I have technical difficulties or trouble accessing the virtual meeting website?

 

A:

We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website. If you encounter any difficulties accessing the virtual meeting website during the check-in or meeting time, please call the technical support number that will be posted on the virtual meeting website log-in page at www.virtualshareholdermeeting.com/TIVO2020.

 

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Q:

What if I cannot virtually attend the TiVo special meeting?

 

A:

You may vote your shares before the TiVo special meeting by Internet, by proxy or by telephone pursuant to the instructions contained in your proxy card. You do not need to access the TiVo special meeting webcast to vote if you submitted your vote via proxy, by Internet or by telephone in advance of the TiVo special meeting.

 

Q:

What proposals will be considered at the TiVo special meeting?

 

A:

At the TiVo special meeting, TiVo stockholders will be asked to consider and vote on (i) a proposal to adopt the merger agreement, which we refer to as the TiVo merger proposal, (ii) a proposal to adjourn the TiVo special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the TiVo merger proposal, which we refer to as the TiVo adjournment proposal and (iii) a non-binding, advisory proposal to approve the compensation that may become payable to TiVo’s named executive officers in connection with the consummation of the mergers, which we refer to as the TiVo compensation proposal. TiVo will transact no other business at its special meeting except such business as may be properly brought before the TiVo special meeting or any adjournment or postponement thereof.

 

Q:

How does the TiVo board of directors recommend that I vote?

 

A:

The TiVo board approved the merger agreement and determined that the merger agreement and the transactions contemplated thereby, including the TiVo merger, are advisable and fair to, and in the best interests of, TiVo and its stockholders.

TiVo’s directors and executive officers have certain financial interests in the mergers that may be different from, or in addition to, those of TiVo stockholders generally, as discussed in more detail in the section entitled “Adoption of the Merger Agreement—Recommendation of the TiVo Board of Directors—Interests of TiVo Directors and Executive Officers in the Mergers” beginning on page 97.

The TiVo board recommends that the TiVo stockholders vote:

 

   

“FOR” the TiVo merger proposal;

 

   

“FOR” the TiVo adjournment proposal; and

 

   

“FOR” the TiVo compensation proposal.

 

Q:

How do I vote?

 

A:

If you are a holder of record of TiVo common stock as of the close of business on the record date for the TiVo special meeting, you may through the Internet during the TiVo special meeting at www.virtualshareholdermeeting.com/TIVO2020 or, to ensure your shares are represented at the applicable meeting, you may vote by:

 

   

accessing the Internet before the TiVo special meeting at the website specified on your proxy card;

 

   

calling the toll-free number specified on your proxy card; or

 

   

marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

If your shares are held in street name, through a broker, bank, trustee or other nominee, please follow the instructions on a voting instruction card furnished by the record holder.

 

Q:

What is a “broker non-vote?”

 

A:

Under stock exchange rules, banks, brokers and other nominees may use their discretion to vote “uninstructed” shares (i.e., shares held of record held by banks, brokers or other nominees but with respect

 

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  to which the beneficial owner of such shares has not provided instructions on how to vote on a particular proposal) with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. “Non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation) and certain corporate governance proposals, even if management-supported. A “broker non-vote” occurs on an item when (i) a broker, nominee or intermediary has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders, but is not permitted to vote on other proposals without instructions from the beneficial owner of the shares and (ii) the beneficial owner fails to provide the broker, nominee or intermediary with such instructions. Because none of the proposals to be voted on at the TiVo special meeting are routine matters for which brokers may have discretionary authority to vote, TiVo does not expect there to be any broker non-votes at the TiVo special meeting.

 

Q:

What vote is required to approve each TiVo proposal?

 

A:

Proposal 1: To Adopt the Merger Agreement by TiVo Stockholders. Approving the TiVo merger proposal requires the affirmative vote of holders of a majority of all outstanding shares of the TiVo common stock entitled to vote on the TiVo merger proposal. Accordingly, a TiVo stockholder’s failure to submit a proxy card or to vote through the Internet during the TiVo special meeting, an abstention from voting, or a broker non-vote, if any, will have the same effect as a vote “AGAINST” the TiVo merger proposal.

Proposal 2: To Adjourn the TiVo Special Meeting by TiVo Stockholders. Approving the TiVo adjournment proposal (if necessary or appropriate to solicit additional proxies if there are not sufficient votes to adopt the merger agreement) requires the affirmative vote of a majority of the shares of TiVo common stock in attendance or represented by proxy at the TiVo special meeting. Accordingly, abstentions will have the same effect as a vote “AGAINST” the TiVo adjournment proposal, and shares held by TiVo stockholders not in attendance at, and who have not submitted a proxy for, the TiVo special meeting, will have no effect on the outcome of any vote on the TiVo adjournment proposal. As TiVo does not expect there to be any broker non-votes at the TiVo special meeting, broker non-votes will have no effect on the outcome of any vote on the TiVo adjournment proposal.

Proposal 3: Regarding Certain TiVo Merger-Related Executive Compensation Arrangements. In accordance with Section 14A of the Exchange Act, TiVo is providing stockholders with the opportunity to approve, by non-binding advisory vote, compensation payments for TiVo’s named executive officers in connection with the mergers, as reported in the section of this joint proxy statement/prospectus entitled “Advisory (Non-Binding) Vote on Compensation” beginning on page 157. Approving the TiVo compensation proposal, on a non-binding advisory basis, requires the affirmative vote of a majority of the shares of TiVo common stock in attendance or represented by proxy and entitled to vote at the TiVo special meeting. Accordingly, abstentions will have the same effect as a vote “AGAINST” the TiVo compensation proposal, and broker non-votes (which are not considered votes cast), if any, and shares held by TiVo stockholders not in attendance at, and who have not submitted a proxy for, the TiVo special meeting, will have no effect on the outcome of any vote to approve, on a non-binding advisory basis, the TiVo compensation proposal, assuming a quorum is present.

 

Q:

How many votes do I have?

 

A:

You are entitled to cast one (1) vote for each share of TiVo common stock that you owned as of the close of business on the record date for the TiVo special meeting. As of the close of business on the record date for the TiVo special meeting, there were [●] shares of TiVo common stock outstanding entitled to vote at the TiVo special meeting.

 

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Q:

What will happen if I fail to vote or I abstain from voting?

 

A:

Proposal 1: To Adopt the Merger Agreement by TiVo Stockholders. If you are a TiVo stockholder and fail to vote, fail to instruct your broker or nominee to vote, or vote to abstain, it will have the same effect as a vote “AGAINST” the TiVo merger proposal.

Proposal 2: To Adjourn the TiVo Special Meeting by TiVo Stockholders. If you are a TiVo stockholder and vote to abstain, it will have the same effect as a vote “AGAINST” the TiVo adjournment proposal. If you are a TiVo stockholder and fail to vote, it will have no effect on the TiVo adjournment proposal. As TiVo does not expect there to be any broker non-votes at the TiVo special meeting, if you are a TiVo stockholder and fail to instruct your broker or nominee to vote, it will have no effect on the TiVo adjournment proposal.

Proposal 3: Regarding Certain TiVo Merger-Related Executive Compensation Arrangements. If you are a TiVo stockholder and vote to abstain, it will have the same effect as a vote “AGAINST” the TiVo compensation proposal. If you are a TiVo stockholder and fail to vote or fail to instruct your broker or nominee to vote, it will have no effect on the TiVo compensation proposal, assuming a quorum is present.

 

Q:

What constitutes a quorum?

 

A:

The presence in person or by proxy of the holders of a majority of the shares of TiVo common stock entitled to vote at the TiVo special meeting constitutes a quorum. TiVo stockholders who virtually attend the TiVo special meeting via live audio-only webcast at www.virtualshareholdermeeting.com/TIVO2020 will be considered present “in person” for purposes of establishing a quorum and for all other purposes. Shares of TiVo common stock that are represented at the TiVo special meeting and are entitled to vote but not voted, including TiVo shares for which a stockholder directs an “abstention” from voting will be counted as present for purposes of establishing a quorum. However, broker non-votes, if any, will not be included to establish a quorum. Because none of the proposals to be voted on at the TiVo special meeting are routine matters for which brokers may have discretionary authority, TiVo does not expect there to be any broker non-votes at the TiVo special meeting.

 

Q:

If my shares are held in “street name” by my broker, will my broker automatically vote my shares for me?

 

A:

No. If you hold your shares in a stock brokerage account or if your shares are held by a bank or nominee, that is, in “street name,” your broker, bank, trust company or other nominee cannot vote your shares on “non-routine” matters without instructions from you. You should instruct your broker, bank, trust company or other nominee as to how to vote your shares, following the directions provided by your broker, bank, trust company or other nominee to you. Please check the voting form used by your broker, bank, trust company or other nominee.

If you are a TiVo stockholder and you do not provide your broker, bank, trust company or other nominee with instructions and your broker, bank, trust company or other nominee submits an unvoted proxy, your shares of TiVo common stock will not be counted for purposes of determining a quorum at the TiVo special meeting or be voted on any proposal on which your broker, bank, trust company or other nominee does not have discretionary authority.

 

Q:

What will happen if I return my proxy card without indicating how to vote?

 

A:

If you are a registered holder of record and you return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by that proxy as recommended by the TiVo board.

Please note that you may vote your shares held in street name by returning a proxy card directly to TiVo, or you may vote at the TiVo special meeting using the 16-digit control number included in your proxy card or the materials provided by your bank or brokerage firm.

 

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If you are a TiVo stockholder and you do not instruct your broker on how to vote your TiVo shares, your broker may not vote your TiVo shares, which will have the same effect as a vote “AGAINST” the TiVo merger proposal but will have no effect on the TiVo adjournment proposal and the TiVo compensation proposal.

 

Q:

Can I change my vote after I have returned a proxy or voting instruction card?

 

A:

Yes. You can change your vote at any time before your proxy is voted at the TiVo special meeting.

If you are a registered holder of record you can change your vote or revoke your proxy at any time before it is exercised at the TiVo special meeting by doing any of the following:

 

   

you can send a completed proxy card bearing a later date than your original proxy card and mailing it so that it is received prior to the TiVo special meeting;

 

   

you can send a notice of revocation to the TiVo Corporate Secretary, dated as of a later date than the date of the proxy and received prior to the TiVo special meeting;

 

   

you can log on to the Internet website specified on your proxy card before the TiVo special meeting as you would to submit your proxy electronically or by calling the telephone number specified on your proxy card, in each case following the instructions on your proxy card and to the extent you are eligible to do so; or

 

   

you can virtually attend the TiVo special meeting and vote through the Internet by visiting www.virtualshareholdermeeting.com/TIVO2020. To attend the meeting, you will need the 16-digit control number included in your proxy card. Simply attending the meeting will not, by itself, revoke your proxy.

If you hold your shares in street name through a broker, bank or other nominee holder of record, you must contact your broker, bank or other nominee holder of record to change your vote or you will need the 16-digit control number included in your proxy card or in the materials provided by your bank, brokerage firm or other nominee to vote your shares if you wish to cast your vote through the Internet during the TiVo special meeting.

Your attendance alone will not revoke any proxy that you have previously given or change your vote.

 

Q:

What happens if I transfer my shares of TiVo common stock before the special meeting?

 

A:

The record date for the TiVo special meeting is earlier than the date of the TiVo special meeting and the date that the mergers are expected to be completed. If you transfer your TiVo shares after the record date but before the TiVo special meeting, you will retain your right to vote at the TiVo special meeting. However, in order to receive the TiVo merger consideration, you must hold your shares of TiVo common stock through the completion of the mergers.

 

Q:

What if I hold shares in both Xperi and TiVo?

 

A:

If you are both an Xperi stockholder and a TiVo stockholder, you will receive two separate packages of proxy materials. A vote cast as an Xperi stockholder will not count as a vote cast as a TiVo stockholder, and a vote cast as a TiVo stockholder will not count as a vote cast as an Xperi stockholder. Therefore, please separately submit a proxy for each of your Xperi and TiVo shares.

 

Q:

Who is the inspector of election?

 

A:

The TiVo board has appointed a representative of Broadridge Financial Solutions, Inc. to act as the inspector of election at the TiVo special meeting.

 

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Q:

Where can I find the voting results of the special meetings?

 

A:

The preliminary voting results are expected to be announced at the TiVo special meeting. In addition, within four (4) business days following the TiVo special meeting, TiVo intends to file the final voting results of its special meeting with the SEC on Form 8-K.

 

Q:

What will happen if all of the proposals to be considered at the special meetings are not approved?

 

A:

As a condition to the completion of the mergers, TiVo stockholders must approve the TiVo merger and Xperi stockholders must approve the Xperi merger. Completion of the mergers is not conditioned or dependent on approval of any of the other proposals to be considered at the special meetings. Under specified circumstances, Xperi or TiVo may be required to pay to, or be entitled to receive from, the other party a fee with respect to termination of the merger agreement, see “Adoption of the Merger Agreement—The Merger Agreement—Expenses and Termination Fees” beginning on page 152.

 

Q:

Why are TiVo stockholders being asked to approve, on a non-binding advisory basis, the compensation that may be paid or become payable to TiVo’s named executive officers in connection with the completion of the mergers?

 

A:

The rules promulgated by the SEC under Section 14A of the Exchange Act require TiVo to seek a non-binding, advisory vote with respect to certain compensation that may be paid or become payable to TiVo’s named executive officers in connection with the mergers. For more information regarding such payments, see the section entitled “Advisory (Non-Binding) Vote on Compensation” beginning on page 157.

 

Q:

What will happen if TiVo stockholders or Xperi stockholders do not approve, on a non-binding advisory basis, the payments to Xperi’s and TiVo’s named executive officers in connection with the completion of the mergers?

 

A:

The votes on the Xperi compensation proposal and the TiVo compensation proposal are votes separate and apart from the votes on the Xperi merger proposal and the TiVo merger proposal. Accordingly, Xperi stockholders may vote in favor of the Xperi merger proposal and not in favor of the Xperi compensation proposal, or vice versa. Approval of the Xperi compensation proposal is not a condition to consummation of the mergers, and it is advisory in nature only, meaning it will not be binding on Xperi, TiVo or HoldCo. Likewise, TiVo stockholders may vote in favor of the TiVo merger proposal and not in favor of the TiVo compensation proposal, or vice versa. Approval of the TiVo compensation proposal is not a condition to consummation of the mergers, and it is advisory in nature only, meaning it will not be binding on Xperi, TiVo or HoldCo.

 

Q:

What do I need to do now?

 

A:

Carefully read and consider the information contained in and incorporated by reference into this joint proxy statement/prospectus, including its annexes.

If you are a holder of record, in order for your shares to be represented at the TiVo special meeting, you must:

 

   

attend the TiVo special meeting virtually via live audio-only webcast;

 

   

vote through the Internet or by telephone before the TiVo special meeting by following the instructions included on your proxy card; or

 

   

indicate on the enclosed proxy card how you would like to vote and return the proxy card in the accompanying pre-addressed postage paid envelope.

 

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If you hold your shares in street name, in order for your shares to be represented at your special meeting, you should instruct your broker, bank, trust company or other nominee as to how to vote your shares, following the directions provided to you by your broker, bank, trust company or other nominee.

 

Q:

Who can help answer my questions?

 

A:

TiVo stockholders who have questions about the merger agreement, the mergers or the other matters to be voted on at the special meetings, who need assistance submitting their proxy or voting shares or who desire additional copies of this joint proxy statement/prospectus or additional proxy cards should contact:

MacKenzie Partners, Inc.

1407 Broadway Avenue, 27th Floor

New York, New York 10018

proxy@mackenziepartners.com

Call Collect: (212) 929-5500

or

Toll-Free: (800) 322-2885

Email: proxy@mackenziepartners.com

 

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SUMMARY

This summary highlights information contained elsewhere in this joint proxy statement/prospectus and may not contain all the information that is important to you. Xperi and TiVo urge you to read carefully the remainder of this joint proxy statement/prospectus, including the attached annexes and the other documents to which we refer you herein and documents incorporated by reference into this joint proxy statement/prospectus, as this section does not provide all the information that might be important to you with respect to the mergers and the other matters being considered at the applicable special meeting. See also the section entitled “Where You Can Find More Information” beginning on page 211. We have included page references to direct you to a more complete description of the topics presented in this summary.

The Companies

Xperi Corporation (See page 42)

Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

Telephone: (408) 321-6000

Xperi Corporation, which we refer to as Xperi, licenses its innovative products, technologies and inventions to global electronics companies which, in turn, integrate the technologies into their own consumer electronics and semiconductor products. Xperi’s technologies and inventions are widely adopted and used every day by millions of people. Xperi’s audio and imaging technologies have shipped in billions of devices for the home, mobile and automotive markets. Xperi’s semiconductor packaging and interconnect technologies have been licensed to more than 100 customers and have shipped in over a hundred billion semiconductor chips.

Xperi common stock is listed on Nasdaq under the symbol “XPER.”

Additional information about Xperi and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 211.

TiVo Corporation (See page 42)

TiVo Corporation

2160 Gold Street

San Jose, California 95002

Telephone: (408) 519-9100

TiVo Corporation, which we refer to as TiVo, provides an intellectual property portfolio and products to help consumers enjoy watching their favorite entertainment. TiVo’s technologies enable an integrated entertainment experience, making entertainment content easy to find, watch and enjoy. TiVo’s product business serves up the best movies, video and shows from across live TV, on demand, streaming services and countless apps, helping people discover what to watch as they wish. For content creators and advertisers, TiVo’s machine learning for personalized content recommendations, conversational voice solution and targeted advertising methodologies help deliver a passionate group of watchers to increase viewership and engagement across online video, TV and other entertainment viewing platforms. TiVo’s intellectual property business provides a global portfolio of thousands of patents that underlie this entertainment platform as well as across the broader video landscape.

TiVo common stock is listed on Nasdaq under the symbol “TIVO.”

Additional information about TiVo and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 211.



 

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XRAY-TWOLF HoldCo Corporation (See page 42)

XRAY-TWOLF HoldCo Corporation

c/o Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

Telephone: (408) 321-6000

c/o TiVo Corporation

2160 Gold Street

San Jose, California 95002

Telephone: (408) 519-9100

XRAY-TWOLF HoldCo Corporation, which we refer to as HoldCo, is a Delaware corporation that is jointly owned by Xperi and TiVo and was formed on December 17, 2019, for the purpose of effecting the mergers. To date, HoldCo has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement in connection with the mergers. As of the completion of the mergers, Xperi and TiVo will each become subsidiaries of HoldCo and HoldCo common stock will be listed on Nasdaq under the symbol “XPER.” The business of HoldCo will be the combined businesses currently conducted by Xperi and TiVo.

XRAY Merger Sub Corporation (See page 43)

XRAY Merger Sub Corporation

c/o Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

Telephone: (408) 321-6000

c/o TiVo Corporation

2160 Gold Street

San Jose, California 95002

Telephone: (408) 519-9100

XRAY Merger Sub Corporation, which we refer to as Xperi Merger Sub, is a Delaware corporation and wholly owned subsidiary of HoldCo that was formed on December 17, 2019, for the purpose of effecting the mergers. To date, Xperi Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement in connection with the mergers. Pursuant to the merger agreement, Xperi Merger Sub will be merged with and into Xperi, with Xperi surviving the merger as a subsidiary of HoldCo.

TWOLF Merger Sub Corporation (See page 43)

TWOLF Merger Sub Corporation

c/o Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

Telephone: (408) 321-6000

c/o TiVo Corporation

2160 Gold Street

San Jose, California 95002

Telephone: (408) 519-9100



 

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TWOLF Merger Sub Corporation, which we refer to as TiVo Merger Sub, is a Delaware corporation and wholly owned subsidiary of HoldCo that was formed on December 17, 2019, for the purpose of effecting the mergers. To date, TiVo Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement in connection with the mergers. Pursuant to the merger agreement, TiVo Merger Sub will be merged with and into TiVo, with TiVo surviving the TiVo merger as a subsidiary of HoldCo.

The Merger Agreement and the Merger

A copy of the merger agreement is attached as Annex A to this joint proxy statement/prospectus. Xperi and TiVo encourage you to read the entire merger agreement carefully because it is the principal document governing the mergers. For more information on the merger agreement, see the section entitled “Adoption of the Merger Agreement” beginning on page 44.

Effects of the Mergers (See page 44)

The organization of Xperi, TiVo and HoldCo before and after the mergers is illustrated on this page and the following page:

Prior to the Mergers

 

 

LOGO



 

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The Mergers

 

 

LOGO



 

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After the Mergers

 

LOGO

Contemplated Business Separation (See page 44)

Although there is no current plan or intention to separate any parts of the combined company, Xperi and TiVo currently contemplate that, at some point following the consummation of the mergers and likely no earlier than the first quarter of 2021, the combined company may pursue, subject to the receipt of approval by the HoldCo board and any required regulatory approvals, a separation of the combined company’s product and IP licensing businesses through a tax-efficient transaction, resulting in two independent, publicly traded companies. Xperi and TiVo currently anticipate that any contemplated business separation transaction, if undertaken, will be consummated in the form of a pro-rata spin-off transaction intended to qualify as tax-free under Section 355 of the Code, in which HoldCo stockholders, at such time, would receive shares of capital stock in the resulting spin-off company. For more information on the anticipated business mix of each independent company, see the section entitled “—The Adoption of the Merger Agreement—Contemplated Business Separation” beginning on page 44.

The consummation of the mergers is not conditioned on the determination to proceed with any contemplated business separation transaction described herein and any such determination to proceed with any contemplated business separation will only be made after consummation of the mergers. The HoldCo board may, at any time prior to the consummation of any contemplated business separation, determine to abandon such transaction, and no assurance can be given that such transaction will occur, either in the currently intended form described herein or at all. Xperi stockholders and TiVo stockholders



 

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are being asked to vote to adopt the merger agreement with respect to the proposed mergers and are not being asked to vote on any contemplated business separation transaction. In the event that the HoldCo board determines, following the completion of the mergers, to proceed with any contemplated business separation transaction, we currently anticipate that such contemplated business separation transaction, if undertaken, would be effectuated in the form of a pro-rata spin-off transaction intended to qualify as tax-free under Section 355 of the Code, in which HoldCo stockholders, at such time, would receive shares of capital stock in the resulting spin-off company. Xperi and TiVo currently anticipate that any contemplated business separation transaction will not be consummated prior to the first quarter of 2021. For a further discussion of the risks related to any contemplated business separation transaction, see “Risk Factors—Risks Related to the Combined Company” beginning on page 35.

Merger Consideration (See page 119)

Xperi Merger Consideration. Subject to the terms and conditions set forth in the merger agreement, at the effective time, each share of Xperi common stock issued and outstanding immediately prior to the effective time (excluding any shares of Xperi common stock that are held in treasury) will be converted into the right to receive one (1) share of HoldCo common stock for each share of Xperi common stock.

TiVo Merger Consideration. Subject to the terms and conditions set forth in the merger agreement, at the effective time, each share of TiVo common stock issued and outstanding immediately prior to the effective time (excluding any shares of TiVo common stock that are held in treasury) will be converted into the right to receive 0.455 shares of HoldCo common stock for each share of TiVo common stock, with cash in lieu of any fractional shares of HoldCo common stock.

The merger agreement does not contain any provision that would adjust the exchange ratio based on the fluctuations in the market value of either the Xperi common stock or TiVo common stock. Because of this, the implied value of the merger consideration to the Xperi stockholders and TiVo stockholders will fluctuate between now and the completion of the mergers.

On December 18, 2019, the last trading day prior to the public announcement of the proposed mergers, the closing price on Nasdaq was $20.94 per share of Xperi common stock and $7.89 per share of TiVo common stock. On March 23, 2020, the latest practicable date prior to filing this joint proxy statement/prospectus, the closing price on Nasdaq was $11.46 per share of Xperi common stock and $6.03 per share of TiVo common stock. We urge you to obtain current market quotations before voting your shares.

Treatment of Xperi Stock Options and Other Xperi Equity-Based Awards (See page 120)

The merger agreement provides that, as of the effective time:

 

   

Each outstanding Xperi stock option, whether vested or unvested, will be automatically converted at the effective time into an option to purchase, on the same terms and conditions (including any applicable vesting and exercisability requirements) as were applicable to such Xperi stock option immediately prior to the effective time, one (1) share of HoldCo common stock, at an exercise price per share (rounded up to the nearest whole cent) equal to the per-share exercise price of the Xperi stock option by the Xperi exchange ratio;

 

   

Each outstanding Xperi restricted stock unit award, whether vested or unvested, which we refer to as an Xperi RSU award, will be automatically converted at the effective time into one (1) HoldCo restricted stock unit award, which we refer to as a HoldCo RSU award, on the same terms and conditions (including any applicable vesting and settlement requirements) as were applicable to such Xperi RSU award immediately prior to the effective time; and



 

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Each Xperi RSU award that is subject to performance-vesting based on the achievement of performance metrics immediately prior to the effective time, which we refer to as an Xperi PSU award, will be automatically converted at the effective time into one (1) HoldCo RSU award, on the same terms and conditions (including any applicable performance-based vesting criteria and settlement requirements) as were applicable to such Xperi PSU award immediately prior to the effective time, except as described in the sections of this joint proxy statement entitled “Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Interests of Xperi Directors and Executive Officers in the Mergers—Treatment of Xperi PSU Awards held by Jon Kirchner” beginning on page 76 and “ Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Interests of Xperi Directors and Executive Officers in the Mergers—Treatment of Xperi PSU Awards held by Murali Dharan” beginning on page 76.

In addition, each of the Xperi Amended and Restated Employee Stock Purchase Plan and the Xperi Second Amended and Restated International Employee Stock Purchase Plan, which we refer to as the Xperi ESPPs, will, subject to the consummation of the mergers, terminate effective immediately prior to the effective time. The merger agreement, as amended, provides that any offering period under the Xperi ESPPs will terminate and all options to purchase shares of Xperi common stock under the Xperi ESPPs will be automatically exercised on the earlier to occur of the day that is four (4) trading days before the effective time or the date on which such offering period would otherwise end.

Treatment of TiVo Options and Other Equity-Based Awards (See page 121)

The merger agreement provides that, as of the effective time:

 

   

Each outstanding TiVo stock option, whether vested or unvested, will be automatically converted at the effective time into an option to purchase, on the same terms and conditions (including any applicable vesting and exercisability requirements) as were applicable to such TiVo stock option immediately prior to the effective time, the number of shares of HoldCo common stock (rounded down to the nearest whole share) determined by multiplying the number of shares of TiVo common stock subject to the TiVo stock option by the TiVo exchange ratio (which is 0.455), at an exercise price per share (rounded up to the nearest whole cent) determined by dividing the per-share exercise price of the TiVo stock option by the TiVo exchange ratio;

 

   

Each outstanding TiVo restricted stock unit award, whether vested or unvested, which we refer to as a TiVo RSU award, will be automatically converted at the effective time into a HoldCo restricted stock unit award, which we refer to as a HoldCo RSU award, on the same terms and conditions (including any applicable vesting and settlement requirements) as were applicable to such TiVo RSU award immediately prior to the effective time, with respect to the number of shares of HoldCo common stock (rounded down to the nearest whole share) determined by multiplying the number of shares of TiVo common stock subject to the TiVo RSU award by the TiVo exchange ratio; and

 

   

Under the terms of performance restricted stock unit awards granted by TiVo to its executive officers, which we refer to as TiVo PSUs, performance against the TSR performance metrics will be measured as of the consummation of the mergers, with the ending share price for purposes of the performance period being calculated based on the 30-trading day average closing share price immediately prior to and including the date of consummation of the mergers. Any TiVo PSUs that are deliverable based on this measurement will vest on the consummation date on a pro rata basis (based on the portion of the performance period during which services were performed). Any remaining TiVo PSUs that are deliverable based on this measurement and that did not vest upon consummation of the mergers will vest ratably following the date of consummation of the mergers through the earlier of the first regularly scheduled compensation committee meeting following the end of the performance period or June 1, 2021 (for awards granted in 2018) and June 1, 2022 (for awards granted in 2019).



 

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In addition, certain TiVo RSU awards which vest only upon certain liquidity events will vest upon the consummation of the mergers.

In addition, the Rovi Corporation 2008 Employee Stock Purchase Plan, which we refer to as the TiVo ESPP, will, subject to the consummation of the mergers, terminate effective immediately prior to the effective time. The merger agreement, as amended, provides that any offering period under the TiVo ESPP will terminate and all options to purchase shares of TiVo common stock under the TiVo ESPP will be automatically exercised on the earlier to occur of the day that is four (4) trading days before the effective time or the date on which such offering period would otherwise end.

New HoldCo Equity Awards (See page 122)

In connection with the mergers, and prior to the effective time, HoldCo will adopt the Xperi Corporation 2020 Equity Incentive Plan, which we refer to as the HoldCo Equity Incentive Plan. In addition to the Xperi and TiVo equity awards that will be converted upon completion of the mergers, the combined company will be permitted to issue new equity-based compensation for services rendered to the combined company or any of its participating subsidiaries in the form of stock options, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents, performance awards and stock payments (or any combination thereof) granted under the HoldCo Equity Incentive Plan. No awards may be granted under the HoldCo Equity Incentive Plan prior to the effective time.

Prior to the effective time, HoldCo will also adopt the Xperi Corporation 2020 Employee Stock Purchase Plan, which we refer to as the HoldCo ESPP. The HoldCo ESPP will permit employees of the combined company and its designated subsidiaries to contribute a portion of their eligible compensation (after tax) through payroll deductions to purchase shares of HoldCo common stock at a discount. No awards may be granted under the HoldCo ESPP prior to the effective time.

Material U.S. Federal Income Tax Consequences of the Mergers (See page 129)

It is anticipated that the Xperi merger and the TiVo merger will each qualify as a “reorganization” within the meaning of Section 368(a) of the Code, or as a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code. It is a condition to Xperi’s obligation to complete the Xperi merger that Xperi receive an opinion from Skadden, dated the date of the effective time, to the effect that the Xperi merger and the TiVo merger will each qualify as a “reorganization” within the meaning of Section 368(a) of the Code or, alternatively, as a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code. It is a condition to TiVo’s obligation to complete the TiVo merger that TiVo receive an opinion from Cooley, dated the date of the effective time, to the effect that the Xperi merger and the TiVo merger will each qualify as a “reorganization” within the meaning of Section 368(a) of the Code or, alternatively, as a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code. Based on the tax opinion representations and assumptions (as defined on page 130), in the opinion of Skadden and Cooley, the Xperi merger and the TiVo merger will each qualify as a “reorganization” within the meaning of Section 368(a) of the Code or as a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code.

Accordingly, a U.S. holder (as defined on page 129) of Xperi common stock or TiVo common stock will recognize no gain or loss for U.S. federal income tax purposes upon the exchange of shares of Xperi common stock or TiVo common stock for shares of HoldCo common stock in the Xperi merger or the TiVo merger, respectively, except with respect to cash received by TiVo stockholders in lieu of fractional shares. If any of the tax opinion representations and assumptions is incorrect, incomplete or inaccurate or is violated, the validity of the opinions described above may be affected and the tax consequences of the mergers could differ from those described in this joint proxy statement/prospectus.



 

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Please carefully review the information set forth in the section entitled “Adoption of the Merger Agreement—Material U.S. Federal Income Tax Consequences of the Mergers” beginning on page 129 for a discussion of the material U.S. federal income tax consequences of the mergers. Please consult your own tax advisors as to the specific U.S. federal, state or local or foreign income or other tax consequences to you of the mergers.

Xperi’s Reasons for the Mergers; Recommendation of the Xperi Board (See page 58)

After careful consideration, the Xperi board, on December 17, 2019, approved the merger agreement and determined that entering into the merger agreement and consummating the transactions contemplated thereby are advisable and fair to, and in the best interests of, Xperi and its stockholders. For factors considered by the Xperi board in reaching its decision to approve the merger agreement, see the section entitled “Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Xperi’s Reasons for the Mergers” beginning on page 58. The Xperi board recommends that the Xperi stockholders vote “FOR” each of the Xperi merger proposal, the Xperi adjournment proposal and the Xperi compensation proposal.

TiVo’s Reasons for the Mergers; Recommendation of the TiVo Board (See page 82)

After careful consideration, the TiVo board, on December 18, 2019, approved the merger agreement and determined that entering into the merger agreement and consummating the transactions contemplated thereby, including the TiVo merger, are advisable and fair to, and in the best interests of, TiVo and its stockholders. For factors considered by the TiVo board in reaching its decision to approve the merger agreement, see the section entitled “Adoption of the Merger Agreement—Recommendation of the TiVo Board of Directors—TiVo’s Reasons for the Mergers” beginning on page 82. The TiVo board recommends that TiVo stockholders vote “FOR” each of the TiVo merger proposal, the TiVo adjournment proposal and the TiVo compensation proposal.

Opinion of Xperi’s Financial Advisor (See page 62)

Xperi retained Centerview as financial advisor to Xperi in connection with the proposed mergers and the other transactions contemplated by the merger agreement. In connection with this engagement, the Xperi board requested that Centerview evaluate the fairness, from a financial point of view, to the holders of shares of Xperi common stock (other than any shares held by Xperi as treasury shares, which are collectively referred to as “Xperi Excluded Shares” throughout this section and the summary of Centerview’s opinion below under the caption “Opinion of Xperi’s Financial Advisor”) of the Xperi exchange ratio provided for pursuant to the merger agreement. On December 17, 2019, Centerview rendered to the Xperi board its oral opinion, which was subsequently confirmed by delivery of a written opinion dated December 18, 2019 that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Xperi exchange ratio provided for pursuant to the merger agreement was fair, from a financial point of view, to the holders of shares of Xperi common stock (other than Xperi Excluded Shares).

The full text of Centerview’s written opinion, dated December 18, 2019, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex B and is incorporated herein by reference. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Xperi board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the mergers and Centerview’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of shares of Xperi common stock (other than Xperi Excluded Shares) of the Xperi exchange ratio provided for pursuant to the merger agreement. Centerview’s opinion did not address any other term or aspect of the merger agreement or the mergers



 

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and does not constitute a recommendation to any Xperi stockholder or any other person as to how such stockholder or other person should vote with respect to the mergers or otherwise act with respect to the mergers or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

For further information, see the section of this joint proxy statement/prospectus entitled “Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Opinion of Xperi’s Financial Advisor” beginning on page 62 of this joint proxy statement/prospectus and Annex B.

Opinion of TiVo’s Financial Advisor (See page 84)

On December 18, 2019, at a meeting of the TiVo board, LionTree rendered an oral opinion to the TiVo board (which was subsequently confirmed in writing by delivery of LionTree’s written opinion dated December 18, 2019) as to the fairness, from a financial point of view, as of the date thereof, of the TiVo exchange ratio to the holders of TiVo common stock (other than Xperi and its affiliates), based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by LionTree in preparing its opinion.

LionTree’s opinion was provided to the TiVo board and only addressed the fairness, from a financial point of view, of the TiVo exchange ratio to the holders of TiVo common stock (other than Xperi and its affiliates) (without giving effect to any impact of the mergers on any particular stockholder of TiVo other than in its capacity as a holder of TiVo common stock). The summary of LionTree’s opinion in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex C to this joint proxy statement/prospectus and incorporated herein by reference, and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by LionTree in preparing its opinion. However, neither LionTree’s opinion nor the summary of its opinion and the related analyses set forth in this joint proxy statement/prospectus constitute a recommendation to any stockholder as to how such stockholder should vote or act with respect to the mergers or any other matter.

For further information, see the section of this joint proxy statement/prospectus entitled “Adoption of the Merger Agreement—Recommendation of the TiVo Board of Directors—Opinion of TiVo’s Financial Advisor” beginning on page 84 of this joint proxy statement/prospectus and Annex C.

Interests of Xperi Directors and Executive Officers in the Mergers (See page 75)

In considering the recommendation of the Xperi board that you vote to approve the Xperi merger proposal, you should be aware that Xperi’s directors and executive officers have certain financial interests in the mergers that may be different from, or in addition to, those of Xperi stockholders generally. The Xperi board was aware of and considered these potential interests, among other matters, in evaluating and negotiating the merger agreement and in recommending to you that you vote to approve the adoption of the merger agreement. See “Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Interests of Xperi Directors and Executive Officers in the Mergers” beginning on page 75.

The benefits and financial interests that Xperi’s officers and directors may become eligible to receive as a result of their interests in the mergers include the continued employment of certain executive officers of Xperi by the combined company, the continued positions of up to four directors of Xperi as directors of HoldCo, the



 

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treatment in the Xperi merger of stock options and restricted stock units held by executive officers, the effect of the Xperi merger on any employment, severance or change in control arrangements entered into with Xperi executive officers and the indemnification of former Xperi directors and officers by HoldCo.

For an estimate of the value of the benefits and financial interests that Xperi’s executive officers may become eligible to receive as a result of their interests in the mergers, assuming, among other things, that the mergers were completed on May 29, 2020 and the employment of each executive officer was terminated either by Xperi without cause or by the executive officer for good reason immediately thereafter, see “Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Interests of Xperi Directors and Executive Officers in the Mergers—Merger Related Compensation-Xperi” beginning on page 80.

Interests of TiVo Directors and Executive Officers in the Mergers (See page 97)

In considering the recommendation of the TiVo board that you vote to approve the TiVo merger proposal, you should be aware that TiVo’s directors and executive officers have certain financial interests in the mergers that may be different from, or in addition to, those of TiVo stockholders generally. The TiVo board was aware of and considered these potential interests, among other matters, in evaluating and negotiating the merger agreement and in recommending to you that you vote to approve the adoption of the merger agreement. See “Adoption of the Merger Agreement—Recommendation of the TiVo Board of Directors—Interests of TiVo Directors and Executive Officers in the Mergers” beginning on page 97.

The benefits and financial interests that TiVo’s officers and directors may become eligible to receive as a result of their interests in the mergers include the continued employment of certain executive officers of TiVo by the combined company, the continued positions of three directors of TiVo as directors of HoldCo, the treatment in the TiVo merger of stock options and restricted stock units held by executive officers and directors, the effect of the TiVo merger on any employment, severance or change in control arrangements entered into with TiVo executive officers and the indemnification of former TiVo directors and officers by HoldCo.

For an estimate of the value of the benefits and financial interests that TiVo’s executive officers may become eligible to receive as a result of their interests in the mergers, assuming, among other things, that the mergers were completed on May 29, 2020 and the employment of each executive officer was terminated either by Xperi without cause or by the executive officer for good reason immediately thereafter (other than Peter Halt, TiVo’s former Chief Financial Officer, as is noted and whose lack of any reportable compensation or benefits required to be described is explained), see “Adoption of the Merger Agreement—Recommendation of the TiVo Board of Directors—Interests of TiVo Directors and Executive Officers in the Mergers—Merger Related Compensation-TiVo” beginning on page 102.

Certain Governance Matters Following the Mergers (See page 117)

Under the terms of the merger agreement and the HoldCo bylaws, the Chief Executive Officer of Xperi immediately prior to the mergers will serve as the Chief Executive Officer of HoldCo and the Chief Financial Officer of Xperi immediately prior to the mergers will serve as the Chief Financial Officer of HoldCo.

Under the terms of the merger agreement, at the effective time, the HoldCo board will consist of seven (7) directors, (i) three (3) of whom will be persons designated by Xperi (whom we refer to collectively as the continuing Xperi directors), (ii) three (3) of whom will be persons designated by TiVo (whom we refer to collectively as the continuing TiVo directors) and (iii) one (1) of whom will be the Chief Executive Officer of HoldCo.

At the effective time, the HoldCo board will establish a nominating and corporate governance committee of the board which will consist of four (4) members, (i) two (2) of whom will be continuing Xperi directors and (ii) two (2) of whom will be continuing TiVo directors.



 

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Regulatory Approvals (See page 119)

United States Antitrust. Under the HSR Act, certain mergers and acquisitions cannot be consummated until, among other things, notifications have been given and certain information has been furnished to the U.S. Federal Trade Commission, which we refer to as the FTC, and the Antitrust Division of the U.S. Department of Justice, which we refer to as the Antitrust Division, and specified waiting period requirements have been satisfied. On January 3, each of Xperi and TiVo filed Premerger Notification and Report Forms pursuant to the HSR Act with the Antitrust Division and the FTC. On January 21, 2020, the FTC granted early termination of the HSR Act waiting period.

Republic of Korea Competition. Xperi and TiVo filed a Business Combination Report with the Korea Fair Trade Commission, pursuant to the Korean Monopoly Regulation and Fair Trade Law, Article 18 of its Enforcement Decree, and relevant guidelines, which the Korean Fair Trade Commission received on February 17, 2020. The notification to the Korea Fair Trade Commission initiates a suspensory bar on closing prior to approval.

Xperi and TiVo have agreed to use their reasonable best efforts to take, or cause to be taken, all actions necessary, proper or advisable under applicable antitrust laws and regulations to complete and effect the mergers as soon as possible following the date of the merger agreement.

Completion of the Mergers (See page 146)

We are currently targeting completion of the mergers during the second quarter of 2020, subject to the receipt of required stockholder approvals and regulatory clearance and the satisfaction or waiver of the other closing conditions. It is possible that factors outside the control of Xperi or TiVo could result in the mergers being completed at a later time or not at all.

Conditions to Completion of the Mergers (See page 149)

The obligations of each of Xperi and TiVo to effect the mergers are subject to the satisfaction or waiver of the following conditions:

 

   

the approval by Xperi stockholders of the Xperi merger proposal;

 

   

the approval by TiVo stockholders of the TiVo merger proposal;

 

   

the termination or expiration of any applicable waiting period under the HSR Act;

 

   

the absence of any law, order, judgment or other legal restraint by a court or other governmental entity in the United States or other jurisdiction if such court or other governmental entity has competent jurisdiction over Xperi or TiVo, that prevents the consummation of the Xperi merger or the TiVo merger;

 

   

the SEC having declared effective the registration statement of which this joint proxy statement/prospectus forms a part, and the absence of a stop order or proceedings seeking a stop order by the SEC;

 

   

the approval for listing by Nasdaq, subject to official notice of issuance, of the HoldCo common stock issuable in connection with the mergers;

 

   

no material adverse effect (or effect that would reasonably be expected to have a material adverse effect) with respect to the other party having occurred since September 30, 2019;

 

   

certain representations and warranties of the other party relating to the capital structure being true and correct in all respects (other than immaterial inaccuracies) as of December 18, 2019, and as of immediately prior to the effective time;



 

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certain representations and warranties of the other party relating to corporate power and authority and approval of the merger agreement that are qualified by materiality or material adverse effect or similar language being true and correct in all respects as of December 18, 2019, and as of immediately prior to the effective time (unless such representations or warranties address matters only as of a particular date or with respect to a specific period, in which event such representations or warranties must be true and correct in all respects only as of that particular date or with respect to that specific period);

 

   

certain representations and warranties of the other party relating to corporate power and authority and approval of the merger agreement that are not qualified by materiality or material adverse effect or similar language being true and correct in all material respects as of December 18, 2019, and as of immediately prior to the effective time (unless such representations or warranties address matters only as of a particular date or with respect to a specific period, in which event such representations or warranties must be so true and correct in all material respects only as of such particular date or with respect to such specific period);

 

   

each other representation and warranty of the other party being true and correct as of December 18, 2019, and as of immediately prior to the effective time (unless such representations or warranties address matters only as of a particular date or with respect to a specific period, in which event such representations or warranties must be true and correct only as of such particular date or with respect to such specific period), except where the failure to be so true and correct (without giving effect to any qualifications or limitations as to materiality, material adverse effect or similar language, other than with respect to certain limited exceptions), would not have a material adverse effect on such party;

 

   

the other party having performed or complied in all material respects with all obligations, covenants and agreements required to be performed by it under the merger agreement;

 

   

the receipt of a certificate executed by the Chief Executive Officer and Chief Financial Officer of the other party certifying that the conditions in the six (6) preceding bullet points have been satisfied;

 

   

with respect to Xperi, Xperi’s receipt of an opinion from Skadden to the effect that the Xperi merger and the TiVo merger will each qualify as a “reorganization” within the meaning of Section 368(a) of the Code or, alternatively, as a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code; and

 

   

with respect to TiVo, TiVo’s receipt of an opinion from Cooley to the effect that the Xperi merger and the TiVo merger will each qualify as a “reorganization” within the meaning of Section 368(a) of the Code or, alternatively, as a transaction qualifying for non-recognition of gain and loss under Section 351 of the Code.

In addition, Xperi and TiVo have agreed to certify to HoldCo that they have not been, in the five (5) years before the effective time, a “United States real property holding corporation” as defined in Section 897(c)(2) of the Code or that none of their equity interests constitute a “United States real property interest” as defined in Section 897(c) of the Code. If Xperi or TiVo fails to provide that certification, the transactions will nonetheless close and HoldCo will withhold the Xperi merger consideration and/or the TiVo merger consideration, as the case may be, and pay over to the appropriate taxing authorities the amount required to be withheld under Section 1445 of the Code.

No Solicitation of Acquisition Proposals (See page 141)

Xperi and TiVo have each agreed not to, and to cause its subsidiaries and its and their executive officers and directors not to, and to use its reasonable best efforts to cause its and its subsidiaries’ officers, directors, employees, agents, attorneys, accountants, advisors, investment bankers and other representatives not to, directly or indirectly: (i) solicit, initiate or knowingly take any action to facilitate or encourage any acquisition proposal



 

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(as defined on page 143) or proposal or inquiry that constitutes, or would reasonably be expected to lead to, an acquisition proposal; (ii) participate or engage in any discussions or negotiations with, disclose any information, afford access to their business, properties, assets, books or records, or otherwise cooperate in any way with, or knowingly assist, participate in, facilitate or encourage any effort by, any third party that is seeking to make, or has made, an acquisition proposal; (iii)(A) amend or grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities or any of its subsidiaries (other than provisions in those obligations customarily referred to as “don’t ask” provisions), (B) approve any transaction under Section 203 of the DGCL, or (C) approve any third party becoming an “interested stockholder” under Section 203 of the DGCL; (iv) approve or enter into any agreement, whether written or oral, binding or non-binding, or enter into any agreement or agreement in principle, to abandon, terminate or fail to consummate the transactions contemplated by the merger agreement or breach its obligations under the merger agreement; or (v) resolve, propose or agree to do any of the foregoing.

Each of Xperi and TiVo have each agreed to, and to cause its subsidiaries and its and their officers, directors, employees, agents, attorneys, accountants, advisors, investment bankers and other representatives to immediately cease and terminate, and must not authorize or permit any officers, directors, employees, agents, attorneys, accountants, advisors, investment bankers and other representatives to continue, all existing activities, discussions or negotiations, with any third party conducted with respect to an acquisition proposal and must request and, if necessary, enforce any rights to require any such third party (or its agents or advisors) in possession of information, or any of its subsidiaries to return or destroy all such information.

Notwithstanding these restrictions, the merger agreement provides that, if at any time prior to obtaining approval of its stockholders, either Xperi or TiVo receives an unsolicited bona fide written proposal that does not result from a material breach of the non-solicitation restrictions and that its board of directors determines in good faith (after consultation with its financial advisor and outside counsel) constitutes or would be reasonably likely to lead to a superior proposal (as defined on page 143), Xperi or TiVo, may, upon a determination by that party’s board (after consultation with its outside counsel) that failure to take the action would be inconsistent with its fiduciary duties: (i) participate in discussions or negotiations with the person making the acquisition proposal regarding such acquisition proposal and (ii) furnish information with respect to itself and its subsidiaries to the person making such acquisition proposal pursuant to a confidentiality agreement containing terms no less favorable to Xperi and TiVo than the terms of the confidentiality agreement entered into between Xperi and TiVo (provided that the confidentiality agreement (x) need not contain any “standstill” term, (y) must not include any provision granting any exclusive right to negotiate with the counterparty, prohibiting Xperi or TiVo from satisfying its obligations under the merger agreement or requiring Xperi or TiVo or its subsidiaries to pay or reimburse the counterparty’s fees, costs or expenses). Any information concerning Xperi or TiVo or any of its subsidiaries provided or made available to the person making such acquisition proposal must, to the extent not previously provided to the other party, be provided or made available to that party as promptly as reasonably practicable after it is provided to the person making such acquisition proposal.

Xperi and TiVo have each also agreed to: (i) notify the other party as promptly as reasonably practicable, and in any event within twenty-four (24) hours of receipt, of any acquisition proposal, (ii) notify the other party in writing, as promptly as reasonably practicable, and in any event within twenty-four (24) hours, of any decision of its board as to whether to consider any acquisition proposal or to enter into discussions or negotiations concerning any acquisition proposal or to provide information with respect to it to any person, (iii) notify the other party in writing of the identity of the person making an acquisition proposal and the terms and conditions of any proposal or offer (including any changes thereto), unredacted copies of all written materials relating to the acquisition proposal and such other information as is reasonably necessary to keep the other party informed of the status and material terms of any acquisition proposal, (iv) keep the other party informed as promptly as practicable, and in any event within twenty-four (24) hours, with respect to any changes to the material terms of the acquisition proposal, including by providing unredacted copies of written proposals relating to changes to



 

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such acquisition proposal and (v) promptly, and in any event within twenty-four (24) hours of the determination, notify the other party of any determination by its board that the acquisition proposal constitutes a superior proposal.

Changes in Board Recommendations (See page 143)

The Xperi board and the TiVo board have resolved to recommend to their stockholders the Xperi merger proposal and the TiVo merger proposal, respectively, and to include such recommendations in this joint proxy statement/ prospectus.

The merger agreement provides that, subject to the exceptions described below, neither the Xperi board nor the TiVo board will (i) effect a board recommendation change (as defined on page 144), (ii) approve or recommend, or propose publicly to approve or recommend, any acquisition proposal or superior proposal, (iii) fail to recommend against acceptance of any tender offer or exchange offer for Xperi common stock or TiVo common stock, as applicable, within ten (10) business days after the commencement of such offer, (iv) take any action to exempt or make any person not subject to any potentially applicable anti-takeover statute or regulation, or (v) fail to affirm publicly and without qualification its board recommendation following a reasonable written request by the other party, prior to the earlier of ten (10) calendar days following such request and five (5) business days prior to the relevant stockholder meeting (subject to certain limited exceptions).

Notwithstanding the foregoing restrictions, at any time prior to obtaining the relevant stockholder approval, the Xperi board or the TiVo board, as applicable, may, if it determines (after consultation with its outside counsel and financial advisor), after it has received a superior proposal (as defined on page 143) (and after consultation with its outside counsel) that the failure to take such action would be inconsistent with its fiduciary duties, effect a board recommendation change. However, such board of directors may not take any such action unless it has given the other party at least four (4) business days’ written notice specifying the material terms and conditions of such proposal and identifying the person making such proposal, or in the event of a subsequent modification to the material terms and conditions of such superior proposal, at least two (2) business days’ written notice advising such other party of the modification to such terms and conditions; provided that during such four (4) or two (2) business day notice period, as applicable, such party engages (to the extent requested by the other party) in good faith negotiations with the other party to amend the merger agreement in such a manner that the acquisition proposal no longer constitutes a superior proposal.

In addition, at any time prior to obtaining the relevant stockholder approval, the Xperi board or the TiVo board, as applicable, may, if it determines (after consultation with outside counsel) that the failure to do so would be reasonably likely to be inconsistent with its fiduciary duties, effect a board recommendation change in response to any material event or change in circumstance that arises or occurs after the date of the merger agreement that, prior to the date of the merger agreement, was neither known nor reasonably foreseeable by the board of such party, which we refer to as an intervening event (provided that in no event shall any of the following constitute an intervening event: (i) the receipt, existence or terms of an acquisition proposal, (ii) the public announcement, execution, delivery or performance of the merger agreement, the identity of Xperi or TiVo, or the public announcement, pendency or consummation of the transactions contemplated by the merger agreement, (iii) any change to the trading price or trading volume of Xperi common stock or TiVo common stock). However, such board of directors may not take any such action unless it has given the other party at least four (4) business days’ written notice advising the other party of all material information with respect to any such intervening event and stating that it intends to make a board recommendation change and providing its rationale therefor.



 

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Termination of the Merger Agreement (See page 150)

The merger agreement may be terminated at any time prior to the effective time under the following circumstances:

 

   

before the receipt of both parties’ requisite stockholder approvals, by mutual written consent of Xperi and TiVo;

 

   

before the receipt of its stockholder approval, by either Xperi or TiVo, if (i) it terminates concurrently with its entry into (and in order to enter into) a definitive acquisition agreement that is authorized by its board and is a superior proposal, (ii) it has complied in all material respects certain of its related obligations under the merger agreement, and (iii) it pays the applicable termination fee to the other party.

 

   

whether before or after receipt of requisite stockholder approval, by either Xperi or TiVo:

 

   

if the mergers are not consummated by 5:00 p.m., Pacific Time on September 30, 2020, except that this right to terminate the merger agreement will not be available to a party whose action or failure to act constituted a material breach of the merger agreement and proximately caused (or resulted in), the failure of the mergers to be consummated by that time;

 

   

if any final and nonappealable legal restraint that makes the consummation of the merger illegal (or permanently restrains, enjoins or prohibits the consummation of the mergers) is in effect;

 

   

if the approval of the Xperi merger proposal has not been obtained by reason of the failure to obtain the required vote at a duly convened Xperi stockholders meeting (or any adjournment or postponement of that meeting);

 

   

if the approval of the TiVo merger proposal has not been obtained by reason of the failure to obtain the required vote at a duly convened TiVo stockholders meeting (or any adjournment or postponement of that meeting);

 

   

before the receipt of the other party’s requisite stockholder approval, by either Xperi or TiVo if the other party’s triggering event (as defined on page 151 below) has occurred;

 

   

if the other party has materially breached any of its covenants, obligations or other agreements contained in the merger agreement and if:

 

   

that breach would give rise to the failure of the applicable condition to consummate the mergers;

 

   

that breach is not curable by September 30, 2020, or is not cured within fifteen (15) business days after the other party gives notice of that breach or inaccuracy; and

 

   

the terminating party is not then in material breach of any of its representations, warranties, covenants, obligations or other agreements included in the merger agreement such that the other party would have the right to terminate the merger agreement;

 

   

if any of the representations and warranties of the other party were inaccurate when made (or, if not made as of a specific date, have become inaccurate) and if:

 

   

that inaccuracy would give rise to the failure of the applicable condition to consummate the mergers;

 

   

that inaccuracy is not curable by September 30, 2020, or is not cured within fifteen (15) business days after the other party gives notice of that breach or inaccuracy; and

 

   

the terminating party is not then in material breach of any of its representations, warranties, covenants, obligations or other agreements included in the merger agreement such that the other party would have the right to terminate the merger agreement.



 

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Expenses and Termination Fees Relating to the Mergers (See page 152)

Generally, each party is required to pay all fees and expenses incurred by it in connection with the mergers and the other transactions and agreements contemplated by the merger agreement. However, the merger agreement provides that, upon termination of the merger agreement under certain circumstances, Xperi may be obligated to pay TiVo a termination fee of $44,000,000 or TiVo may be obligated to pay Xperi a termination fee of $50,800,000. Additionally, under specified circumstances, either of Xperi or TiVo may be required to pay an expense reimbursement amount of up to $10,000,000. See the section entitled “Adoption of the Merger Agreement—The Merger Agreement—Expenses and Termination Fees” beginning on page 152 for a more complete discussion of the circumstances under which termination fees will be required to be paid.

Accounting Treatment (See page 131)

The mergers will be accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification Topic 805, Business Combinations, which we refer to as ASC 805. Generally accepted accounting principles in the United States, which we refer to as U.S. GAAP, require that one of the two companies in the mergers be designated as the acquirer for accounting purposes based on the evidence available. Xperi will be treated as the acquiring entity for accounting purposes. In identifying Xperi as the acquiring entity for accounting purposes, the companies took into account the voting rights of all equity instruments, the planned composition of the corporate governing body and senior management of the combined company, the size of each of the companies, and the terms of the exchange of equity interests. In assessing the size of each of the companies, the companies evaluated various metrics, including, but not limited to: assets, revenue, billings, operating income, operating cash flow and market capitalization. No single factor was the sole determinant in the overall conclusion that Xperi is the acquirer for accounting purposes, rather all factors were considered in arriving at such conclusion.

No Appraisal Rights Available (See page 132)

Under the DGCL, Xperi stockholders and TiVo stockholders are not entitled to appraisal rights in connection with the Xperi merger and TiVo merger, respectively.

Listing of HoldCo Common Stock (See page 118)

It is a condition to the completion of the mergers that the HoldCo common stock to be issued to Xperi stockholders and TiVo stockholders in connection with the mergers be approved for listing on Nasdaq, subject to official notice of issuance.

De-listing and Deregistration of Xperi Common Stock and TiVo Common Stock (See page 132)

When the mergers are completed, each of the Xperi common stock and TiVo common stock currently listed on Nasdaq will cease to be quoted on Nasdaq and will subsequently be deregistered under the Exchange Act.

Comparison of Xperi Stockholder Rights (See page 191)

Upon completion of the mergers, Xperi stockholders will become stockholders of HoldCo and their rights will be governed by Delaware law and the governing corporate documents of HoldCo in effect at the effective time, the forms of which are attached as Annex D and Annex E hereto. Xperi stockholders will have different rights once they become HoldCo stockholders due to differences between the governing corporate documents of each of the entities. These differences are described in detail in the section entitled “Comparison of Rights of Stockholders” beginning on page 191.



 

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Comparison of TiVo Stockholder Rights (See page 191)

Upon completion of the mergers, TiVo stockholders will become stockholders of HoldCo and their rights will be governed by Delaware law and the governing corporate documents of HoldCo in effect at the effective time, the forms of which are attached as Annex D and Annex E hereto. TiVo stockholders will have different rights once they become HoldCo stockholders due to differences between the governing corporate documents of each of the entities. These differences are described in detail in the section entitled “Comparison of Rights of Stockholders” beginning on page 191.

The Xperi Special Meeting (See page 159)

Date, Time and Place: The Xperi special meeting will be held at [●], on [●], 2020, at [●], local time. Due to concerns about the coronavirus or COVID-19 and to assist in protecting the public health and well-being of Xperi’s stockholders and employees, Xperi is planning for the possibility that the Xperi special meeting may be held solely by means of remote communication (i.e., a virtual-only meeting). If Xperi takes this step, Xperi will publicly announce, as soon as practicable prior to the Xperi special meeting, the decision in a press release (that will also be filed with the SEC) and post additional information on Xperi’s investor relations website at investor.xperi.com. We recommend that you monitor this website for updated information, and please check the website in advance of the Xperi special meeting date if you are planning to attend in person.

Purpose: At the Xperi special meeting, Xperi stockholders will be asked:

 

   

to consider and vote on the Xperi merger proposal;

 

   

to consider and vote on the Xperi adjournment proposal; and

 

   

to consider and vote on the Xperi compensation proposal.

Record Date; Voting Rights

Only holders of record of Xperi common stock at the close of business on April 13, 2020, the record date for voting at the Xperi special meeting, which we refer to as the Xperi record date, are entitled to vote at the Xperi special meeting. On the Xperi record date, [●] shares of Xperi common stock were outstanding.

You may cast one (1) vote for each share of Xperi common stock that you owned as of the close of business on the Xperi record date.

Vote Required. The votes required for each proposal are as follows:

Proposal 1: The votes cast “FOR” this proposal must represent a majority of all outstanding shares of Xperi common stock entitled to vote.

Proposal 2: Approval of this proposal requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on the proposal.

Proposal 3: Approval of this proposal requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on the proposal.

Under stock exchange rules, if you hold your shares of Xperi common stock in “street name,” your broker, nominee or intermediary may not vote your shares without instructions from you on non-routine matters. None of the proposals to be voted on at the Xperi special meeting are routine matters. Therefore, without your voting instructions, your broker or other nominee may not vote your shares on Proposal 1, Proposal 2 or Proposal 3 at the Xperi special meeting.



 

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Abstentions and broker non-votes will have the same effect as a vote “AGAINST” Proposal 1. Abstentions will have the same effect as a vote “AGAINST” Proposal 2 and Proposal 3. Broker non-votes, if any, will have no effect on Proposal 2 and Proposal 3 (assuming a quorum is present).

As of the close of business on the Xperi record date, less than [●]% of the outstanding shares of Xperi common stock were held by Xperi’s directors and executive officers and their affiliates. We currently expect that Xperi’s directors and executive officers will vote their Xperi shares in favor of the above-listed proposals, although none of them has entered into any agreements obligating him or her to do so.

Completion of the mergers is conditioned on approval of the Xperi merger proposal.

The TiVo Special Meeting (See page 165)

Date, Time and Place: Due to the public health concerns regarding the coronavirus pandemic, the TiVo special meeting will be held virtually via live audio-only webcast at www.virtualshareholdermeeting.com/TIVO2020 on [●], 2020 at [●] Pacific Time. The TiVo special meeting will be held online only and you will not be able to attend in person. Online check-in will begin at [●] Pacific Time and you should allow ample time for the check-in procedures. You will be able to vote your shares electronically by Internet and submit questions online during the TiVo special meeting by logging in to the website listed above using the 16-digit control number included in your proxy card.

Purpose: At the TiVo special meeting, TiVo stockholders will be asked:

 

   

to consider and vote on the TiVo merger proposal;

 

   

to consider and vote on the TiVo adjournment proposal; and

 

   

to consider and vote on the TiVo compensation proposal.

Record Date; Voting Rights

Only holders of record of TiVo common stock at the close of business on [●], the record date for voting at the TiVo special meeting, which we refer to as the TiVo record date, are entitled to vote at the TiVo special meeting. On the TiVo record date, [●] shares of TiVo common stock were outstanding.

You may cast one (1) vote for each share of TiVo common stock that you owned as of the close of business on the TiVo record date.

Vote Required. The votes required for each proposal are as follows:

Proposal 1: Approval of this proposal requires the affirmative vote of a majority of all outstanding shares of TiVo common stock entitled to vote on the TiVo merger proposal.

Proposal 2: Approval of this proposal requires the affirmative vote of a majority of the shares of TiVo common stock in attendance or represented by proxy at the TiVo special meeting.

Proposal 3: Approval of this proposal requires the affirmative vote of a majority of the shares of TiVo common stock in attendance or represented by proxy and entitled to vote at the TiVo special meeting.

Under stock exchange rules, if you hold your shares of TiVo common stock in “street name,” your broker, nominee or intermediary may not vote your shares without instructions from you on non-routine matters. None of the proposals to be voted on at the TiVo special meeting are routine matters. Therefore, without your voting instructions, your broker or other nominee may not vote your shares on Proposal 1, Proposal 2 or Proposal 3 at the TiVo special meeting.



 

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Abstentions and broker non-votes, if any, will have the same effect as a vote “AGAINST” Proposal 1 and Proposal 2. Abstentions will have the same effect as a vote “AGAINST” Proposal 3 and broker non-votes, if any, will have no effect on Proposal 3 (assuming a quorum is present). However, because none of the proposals to be voted on at the TiVo special meeting are routine matters for which brokers may have discretionary authority to vote, TiVo does not expect any broker non-votes at the TiVo special meeting.

As of the close of business on the TiVo record date, less than [●]% of the outstanding shares of TiVo common stock were held by TiVo’s directors and executive officers and their affiliates. We currently expect that TiVo’s directors and executive officers will vote their TiVo shares in favor of the above-listed proposals, although none of them has entered into any agreements obligating him or her to do so.

Completion of the mergers is conditioned on approval of the TiVo merger proposal.



 

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Selected Historical Financial Data of Xperi

The following table sets forth selected historical consolidated financial information for Xperi. The historical consolidated financial information for each of the years in the three (3)-year period ended December 31, 2019 and the selected historical consolidated balance sheet data as of December 31, 2019 and December 31, 2018, have been derived from the audited consolidated financial statements of Xperi as of and for the fiscal year ended December 31, 2019, contained in its annual report on Form 10-K filed with the SEC on February 18, 2020, which is incorporated by reference into this joint proxy statement/prospectus. The selected historical consolidated financial information for each of the years ended December 31, 2016 and December 31, 2015, and the selected historical balance sheet data as of December 31, 2017, December 31, 2016 and December 31, 2015, have been derived from Xperi’s audited consolidated financial statements as of and for such years contained in Xperi’s other reports filed with the SEC, as adjusted as described herein, which are not incorporated by reference into this joint proxy statement/prospectus. The following information should be read together with Xperi’s consolidated financial statements and the notes related to those financial statements. See “Where You Can Find More Information” beginning on page 211. Xperi’s historical consolidated financial information may not be indicative of the future performance of Xperi or the combined company.

 

    Year Ended December 31,  
    2019     2018(2)     2017     2016(1)     2015  
    (In thousands, except per share amounts or as noted)  

Summary of Operations

         

Net sales

  $ 280,067     $ 406,133     $ 373,732     $ 259,565     $ 273,300  

Net income(3)

  $ (62,530   $ (289   $ (56,558   $ 56,089     $ 117,016  

Per share of common stock (in dollars):

         

Net income per share—basic

  $ (1.27   $ (0.01   $ (1.15   $ 1.14     $ 2.26  

Net income per share—diluted

  $ (1.27   $ (0.01   $ (1.15   $ 1.12     $ 2.23  

Cash dividends declared per share of common stock

  $ 0.80     $ 0.80     $ 0.80     $ 0.80     $ 0.80  

Book value per share of common stock

  $ 11.15     $ 12.69     $ 8.84     $ 10.12     $ 9.80  

Balance Sheet Data

         

Total assets

  $ 1,047,945     $ 1,235,107     $ 1,110,024     $ 1,186,436     $ 539,352  

Long-term debt(4)

  $ 344,000     $ 494,000     $ 594,000     $ 600,000     $ —    

Financial Ratios

         

Research and development expenses as percent of net sales

    40     26     28     17     12

Income before income taxes as percent of net sales

    -30     2     -16     35     61

Return on stockholders’ equity

    -11     0     -13     11     23

Debt as a percent of total capitalization

    39     44     58     54     0

Net cash provided by operating activities(5)

  $ 169,253     $ 135,133     $ 147,265     $ 153,860     $ 147,276  

 

(1)

2016 includes one month of financial results from DTS as well as one-time acquisition related expenses. All periods subsequent to 2016 include financial results from DTS post-acquisition.

(2)

We adopted ASU No. 2014-09 (Topic 606) “Revenue from Contracts with Customers” effective January 1, 2018, which had a material impact on the financial reporting of our operating results. We followed the modified retrospective transition method upon adoption, and under this method the comparative information for prior fiscal years has not been restated and continues to be reported under the accounting standards in effect for those periods.

(3)

Excludes net income (loss) attributable to noncontrolling interest.



 

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(4)

Includes both the short-term and long-term portions of debt principal and excludes approximately $9.3 million, $11.8 million, $14.3 million and $16.8 million in debt issuance costs as of December 31, 2019, 2018, 2017 and 2016, respectively.

(5)

As a result of the adoption of ASU No. 2016-09, Compensation—Stock Compensation (Topic 718), we retrospectively adjusted our Consolidated Statements of Cash Flows to reclassify excess tax benefits of $8.2 million and $0.7 million from financing activities to operating activities in 2016 and 2015, respectively.

Selected Historical Financial Data of TiVo

The following table sets forth selected historical consolidated financial information for TiVo. The historical consolidated financial information for each of the years in the three (3)-year period ended December 31, 2019 and the selected historical consolidated balance sheet data as of December 31, 2019 and December 31, 2018, have been derived from the audited consolidated financial statements of TiVo as of and for the fiscal year ended December 31, 2019, contained in its annual report on Form 10-K filed with the SEC on February 18, 2020, which is incorporated by reference into this joint proxy statement/prospectus. The selected historical consolidated financial information for each of the years ended December 31, 2016 and December 31, 2015, and the selected historical balance sheet data as of December 31, 2017, December 31, 2016 and December 31, 2015, have been derived from TiVo’s audited consolidated financial statements as of and for such years contained in TiVo’s other reports filed with the SEC, which are not incorporated by reference into this joint proxy statement/prospectus. The following information should be read together with TiVo’s consolidated financial statements and the notes related to those financial statements. See “Where You Can Find More Information” beginning on page 211. TiVo’s historical consolidated financial information may not be indicative of the future performance of TiVo or the combined company.

 

     Year Ended December 31,  
     2019     2018(3)     2017     2016(4)     2015  
     (In thousands, except per share amounts or as noted)  

Summary of Operations(1)

          

Net sales

   $ 668,129     $ 695,865     $ 826,456     $ 649,093     $ 526,271  

Net income(2)

   $ (410,067   $ (349,348   $ (37,956   $ 32,661     $ (4,292

Per share of common stock (in dollars):

          

Net income per share—basic

   $ (3.27   $ (2.84   $ (0.32   $ 0.35     $ (0.05

Net income per share—diluted

   $ (3.27   $ (2.84   $ (0.32   $ 0.35     $ (0.05

Cash dividends declared per share of common stock

   $ 0.34     $ 0.72     $ 0.72     $ —       $ —    

Book value per share of common stock

   $ 8.56     $ 12.14     $ 15.40     $ 20.26     $ 12.25  

Balance Sheet Data

          

Total assets

   $ 2,382,572     $ 2,760,303     $ 3,163,678     $ 3,320,843     $ 2,199,296  

Long-term debt

   $ 985,539     $ 992,137     $ 983,095     $ 974,732     $ 967,156  

Financial Ratios

          

Research and development expenses as percent of net sales

     22     25     24     19     19

Income before income taxes as percent of net sales

     -59     -49     -6     -4     2

Return on stockholders’ equity

     -38     -23     -2     2     0

Debt as a percent of total capitalization

     48     40     35     34     48

 

(1)

As a result of goodwill impairment tests performed during the years ended December 31, 2019 and 2018, goodwill impairment charges of $354.6 million and $269.0 million, respectively, were recognized. For



 

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  further details about the goodwill impairment charges, refer to Note 6 of the Consolidated Financial Statements included in Part IV of TiVo’s Annual Report on Form 10-K for the year ended December 31, 2019, which is incorporated by reference herein.
(2)

On May 9, 2019, TiVo announced that its board of directors unanimously approved a plan to separate the product and IP licensing businesses into separately traded public companies, which we refer to as the separation, which was targeted for completion by April 2020. On December 18, 2019, the TiVo and Xperi entered into the merger agreement, pursuant to which TiVo and Xperi agreed to effect an all-stock, merger of equals strategic combination of their respective businesses, which we refer to as the Xperi combination. The separation process has been and the Xperi combination process has been and is expected to continue to be time-consuming and involve significant costs and expenses. During the year ended December 31, 2019, TiVo incurred $26.2 million of merger, separation and transformation costs. For further details about the Separation and the Xperi Combination, refer to Management’s Discussion and Analysis of Financial Condition included in Part II, Item 7 of TiVo’s Annual Report on Form 10-K for the year ended December 31, 2019, which is incorporated by reference herein.

(3)

On January 1, 2018, new accounting standards were initially applied for revenue recognition, the capitalization and amortization of incremental costs to obtain a contract with a customer and the de-recognition of prepaid stored-value product liabilities, such as gift cards. As a result of adopting these new accounting standards, a cumulative effect adjustment, net of tax effects, was recorded that reduced Accumulated deficit by $31.4 million as of January 1, 2018. Under this method the comparative information for prior fiscal years has not been restated and continues to be reported under the accounting standards in effect for those periods.

(4)

On September 7, 2016, Rovi Corporation completed its acquisition of TiVo Solutions for $1.1 billion, which we refer to as the TiVo acquisition. The Consolidated Statements of Operations for the year ended December 31, 2016 reflect an $86.1 million benefit from a reduction in TiVo’s deferred tax asset valuation allowance in connection with the TiVo acquisition, which was partially offset by including TiVo Solutions’ results for the period subsequent to the date of the TiVo acquisition, $40.0 million of transaction, transition and integration costs associated with the TiVo acquisition and $27.3 million in restructuring and asset impairment charges.

Summary Unaudited Pro Forma Condensed Combined Financial Information

The following table shows summary unaudited pro forma condensed combined financial information, which we refer to as the summary pro forma financial information, about the financial condition and results of operations of HoldCo, after giving effect to the mergers, which were prepared in accordance with Article 11 of Regulation S-X using the acquisition method of accounting with Xperi designated as the accounting acquirer of TiVo. See “Adoption of the Merger Agreement—Accounting Treatment of the Mergers” beginning on page 131 and see “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 172 for more information.

The summary pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the mergers had been completed as of January 1, 2019 for the pro forma condensed combined statement of operations or as of December 31, 2019 for the pro forma condensed combined balance sheet, nor are they necessarily indicative of the future operating results or financial position of the combined company. In addition, the summary pro forma financial information includes adjustments which are preliminary and may be revised. There can be no assurance that such revisions will not result in material changes to the information presented. The summary pro forma financial information does not include estimated cost or growth synergies, adjustments related to restructuring or integration activities, future acquisitions or disposals not yet known or probable, including those that may be required by regulatory or governmental authorities in connection with the mergers, or impacts of merger related change in control provisions that are currently not factually supportable and/or probable of occurring.



 

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The summary pro forma financial information has been derived from and should be read in conjunction with the consolidated financial statements and the related notes of both Xperi and TiVo, as filed with their respective Annual Reports on Form 10-K for the fiscal year ended December 31, 2019, which are incorporated by reference in this joint proxy statement/prospectus, and the more detailed unaudited pro forma condensed combined financial information, including the notes thereto, appearing elsewhere in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 211 and see “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 172.

 

In thousands, except per share amounts    For the Year Ended
December 31, 2019
 

Pro Forma Condensed Combined Statement of Operations Data

  

Total revenues

   $ 939,594  

Net loss from continuing operations, net of tax

   $ (495,291

Net loss attributable to HoldCo

   $ (498,581

Loss per common share attributable to HoldCo—basic

   $ (4.64

Loss per common share attributable to HoldCo—diluted

   $ (4.64

Pro Forma Condensed Combined Balance Sheet Data

  

Total assets

   $ 2,947,153  

Total liabilities

   $ 1,500,249  

Total equity

   $ 1,446,904  

Equivalent and Comparative Per Share Information

The following table sets forth selected per share information for Xperi common stock on a historical basis for the year ended December 31, 2019, selected per share information for TiVo common stock on a historical basis for the year ended December 31, 2019, selected per share information for HoldCo common stock on a pro forma combined basis for the year ended December 31, 2019, and selected per share information for TiVo common stock on a pro forma equivalent basis for the year ended December 31, 2019. The per share information reflects the Xperi and TiVo common stock issued and outstanding (excluding any shares that are held in treasury). The historical information of each of Xperi and TiVo as of and for the year ended December 31, 2019 is audited and the historical book value per share information as of December 31, 2019 was derived from those audited historical financial statements. Other information in the table is unaudited.

The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the mergers had been completed as of January 1, 2019 for the pro forma condensed combined statement of operations or as of December 31, 2019 for the pro forma condensed combined balance sheet, nor is it necessarily indicative of the future operating results or financial position of the combined company. You should read the data with the historical consolidated financial statements and related notes of Xperi and TiVo contained in their respective Annual Reports on Form 10-K for the year ended December 31, 2019, each of which is incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 211.

HoldCo’s pro forma combined earnings per share was calculated in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 172. HoldCo pro forma cash dividends per share was calculated based on the sum of the 2019 cash dividends paid by Xperi and TiVo, divided by the pro forma weighted average common shares outstanding for HoldCo for 2019. Pro forma cash dividends per share is presented for illustrative purposes only, and does not represent the actual dividend policy for the combined company. The dividend policy for the combined company has not yet been determined and will be determined by



 

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the HoldCo board following completion of the mergers. TiVo’s pro forma equivalent per share amounts were calculated by multiplying HoldCo pro forma combined per share amounts by the TiVo exchange ratio.

 

     As of or for the
Year Ended
December 31, 2019
 

Xperi—Historical:

  

Book value per share attributable to Xperi

   $ 11.15  

Cash dividends per share

   $ 0.80  

Loss per common share attributable to Xperi—basic

   $ (1.27

Loss per common share attributable to Xperi—diluted

   $ (1.27

TiVo—Historical:

  

Book value per share

   $ 8.56  

Cash dividends per share

   $ 0.34  

Loss per common share—basic

   $ (3.27

Loss per common share—diluted

   $ (3.27

HoldCo Pro Forma—Combined:

  

Book value per share attributable to HoldCo

   $ 13.50  

Cash dividends per share

   $ 0.76  

Loss per common share attributable to HoldCo—basic

   $ (4.64

Loss per common share attributable to HoldCo—diluted

   $ (4.64

TiVo Pro Forma—Equivalent:

  

Book value per share

   $ 6.14  

Cash dividends per share

   $ 0.35  

Loss per common share—basic

   $ (2.11

Loss per common share—diluted

   $ (2.11

Comparative Per Share Market Price

Xperi common stock and TiVo common stock are traded on Nasdaq under the symbols XPER and TIVO, respectively. The following table presents the closing prices of Xperi common stock and TiVo common stock on December 18, 2019, the last trading day before the public announcement of the execution of the merger agreement, and [●], 2020, the last practicable trading day before the date of this joint proxy statement/prospectus. The table also shows the estimated equivalent per share value of the TiVo merger consideration for each share of TiVo common stock on the relevant date.

 

Date

   Xperi
Closing Price
     TiVo
Closing Price
     Estimated
Equivalent Per
Share Value(1)
 

December 18, 2019

   $ 20.94      $ 7.89      $ 9.53  

[●]

   $ [●]      $ [●]      $ [●]  

 

(1)

The implied value of the TiVo merger consideration represents the per share value based on the closing prices of Xperi common stock of $20.94 on December 18, 2019 and [●] on [●], 2020, respectively, and the TiVo exchange ratio.



 

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RISK FACTORS

In addition to the other information included and incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page iv, you should carefully consider the following risks before deciding whether to vote for the Xperi merger proposal and the Xperi compensation proposal, in the case of Xperi stockholders, or for the TiVo merger proposal and the TiVo compensation proposal, in the case of TiVo stockholders. In addition, you should read and consider the risks associated with each of the businesses of Xperi and TiVo because these risks will also affect HoldCo after the consummation of the mergers. Descriptions of some of these risks can be found in each of Xperi’s and TiVo’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, each of which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. You should also read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 211.

Risks Related to the Mergers

Xperi stockholders and TiVo stockholders cannot be sure of the value of the merger consideration they will receive.

Xperi stockholders and TiVo stockholders will receive a fixed number of shares of HoldCo common stock in the Xperi merger and the TiVo merger, respectively, rather than a number of shares of HoldCo common stock with a particular fixed market value. The market values of Xperi common stock and TiVo common stock at the effective time may vary significantly from their prices on the date prior to the date the merger agreement was executed, the date of this joint proxy statement/prospectus or the date on which Xperi stockholders and TiVo stockholders vote on the Xperi merger proposal and the TiVo merger proposal, respectively. Because the respective Xperi and TiVo exchange ratios are fixed and will not be adjusted to reflect any changes in the market prices of Xperi common stock or TiVo common stock, the market value of the HoldCo common stock issued in the Xperi merger or the TiVo merger, as applicable, and the Xperi common stock and TiVo common stock surrendered in the Xperi merger and the TiVo merger, respectively, may be higher or lower than the market values of these shares on earlier dates. All of the merger consideration to be received by Xperi stockholders and TiVo stockholders will be HoldCo common stock (other than cash in lieu of fractional shares received by TiVo stockholders). At the time of the special meetings, Xperi stockholders and TiVo stockholders will not know or be able to determine the value of the HoldCo common stock they may receive upon completion of the mergers. Changes in the market prices of Xperi common stock and TiVo common stock may result from a variety of factors that are beyond the control of Xperi or TiVo, including changes in their respective businesses, operations and prospects, regulatory considerations, governmental actions, and legal proceedings and other developments. Market assessments of the benefits of the mergers, the likelihood that the mergers will be completed and general and industry-specific market and economic conditions may also have an effect on the market price of Xperi common stock and TiVo common stock. Changes in market prices of Xperi common stock and TiVo common stock may also be caused by fluctuations and developments affecting industry-specific and general economic and market conditions and may have an adverse effect on Xperi common stock and TiVo common stock prior to the consummation of the mergers.

Neither Xperi nor TiVo is permitted to terminate the merger agreement solely because of changes in the market prices of either party’s common stock. In addition, the market values of Xperi common stock and TiVo common stock may vary significantly from the date of the special meetings to the date of the completion of the mergers. You are urged to obtain up-to-date prices for Xperi common stock and TiVo common stock. There is no assurance that the mergers will be completed, that there will not be a delay in the completion of the mergers, or that all or any of the anticipated benefits of the mergers will be obtained.

 

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The market price for HoldCo common stock may be affected by factors different from those that historically have affected Xperi common stock and TiVo common stock.

Upon completion of the mergers, holders of shares of Xperi common stock (other than any shares held in treasury) and holders of shares of TiVo common stock (other than any shares held in treasury) will become holders of shares of HoldCo common stock. Xperi and TiVo each have businesses that differ from each other. Accordingly, the results of operations of HoldCo will be affected by some factors that are different from those currently affecting the results of operations of each of Xperi and TiVo. For a discussion of the businesses of Xperi and TiVo and of some important factors to consider in connection with those businesses, see the documents incorporated by reference in this joint proxy statement/prospectus and referred to under “Where You Can Find More Information” in this joint proxy statement/prospectus.

Regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or that cannot be met.

Consummation of the mergers is conditioned upon, among other things, the expiration or termination of the waiting period (and any extensions thereof) applicable to the mergers under the HSR Act which, as noted above, has been obtained by the grant of early termination of the HSR Act waiting period on January 21, 2020. In addition, the parties have submitted a Business Combination Report to the Korea Fair Trade Commission, which initiates a suspensory bar on closing prior to approval. Notwithstanding the grant of early termination of the HSR Act waiting period, at any time before or after the mergers are consummated, any of the DOJ, the FTC or U.S. state attorneys general or foreign governmental authorities could take action under the antitrust laws in opposition to the mergers, including seeking to enjoin completion of the mergers, condition completion of the mergers upon the divestiture of assets of Xperi, TiVo or their subsidiaries or impose restrictions on HoldCo’s post-merger operations. These could negatively affect the results of operations and financial condition of the combined company following completion of the mergers. Any such requirements or restrictions may prevent or delay completion of the mergers or may reduce the anticipated benefits of the mergers, which could also have a material adverse effect on the combined company’s business and cash flows, financial condition and results of operations.

Xperi or TiVo may waive one or more of the closing conditions without re-soliciting stockholder approval.

Xperi or TiVo may determine to waive, in whole or in part, one or more of the conditions to its obligations to consummate the mergers. Xperi or TiVo currently expect to evaluate the materiality of any waiver and its effect on Xperi stockholders or TiVo stockholders, as applicable, in light of the facts and circumstances at the time to determine whether any amendment of this joint proxy statement/prospectus or any re-solicitation of proxies or voting cards is required in light of such waiver. Any determination whether to waive any condition to the mergers or as to re-soliciting stockholder approval or amending this joint proxy statement/prospectus as a result of a waiver will be made by Xperi or TiVo, as applicable, at the time of such waiver based on the facts and circumstances as they exist at that time.

The merger agreement may be terminated in accordance with its terms and the mergers may not be completed.

The completion of the mergers is subject to the satisfaction or waiver of a number of conditions. Those conditions include: (i) the adoption of the merger agreement by the affirmative vote of the holders of a majority of all outstanding shares of Xperi common stock and TiVo common stock, respectively, entitled to vote thereon; (ii) the termination or expiration of the waiting period under the HSR Act; (iii) the absence of certain governmental restraints or prohibitions preventing completion of the Xperi merger or the TiVo merger; (iv) the effectiveness of the registration statement of which this joint proxy statement/prospectus forms a part and the absence of any stop order or proceedings by the SEC; (v) the approval of the shares of HoldCo common stock to be issued to Xperi stockholders and TiVo stockholders for listing on Nasdaq; (vi) the truth and correctness of the representations and warranties made by both parties (generally subject to certain “materiality” and “material adverse effect” qualifiers); (vii) the performance of or compliance with, by Xperi and TiVo, their respective obligations, covenants and

 

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agreements under the merger agreement in all material respects; and (viii) the receipt by both parties of legal opinions from their respective tax counsels with respect to the tax-free nature of each of the mergers.

These conditions to the closing may not be fulfilled and, accordingly, the mergers may not be completed. In addition, if the mergers are not completed by September 30, 2020, either Xperi or TiVo may choose not to proceed with the mergers, and the parties can mutually decide to terminate the merger agreement at any time prior to the consummation of the mergers. In addition, Xperi or TiVo may elect to terminate the merger agreement in certain other circumstances. If the merger agreement is terminated, Xperi and TiVo may incur substantial fees in connection with termination of the merger agreement and will not recognize the anticipated benefits of the mergers. See “Adoption of the Merger Agreement—The Merger Agreement—Termination of the Merger Agreement.”

Termination of the merger agreement could negatively impact Xperi and/or TiVo.

If the merger agreement is terminated in accordance with its terms and the mergers are not consummated, the ongoing businesses of Xperi and TiVo may be adversely affected by a variety of factors. Xperi’s and TiVo’s respective businesses may be adversely impacted by the failure to pursue other beneficial opportunities during the pendency of the mergers, by the failure to obtain the anticipated benefits of completing the mergers, by payment of certain costs relating to the mergers, and by the focus of their respective managements on the mergers for an extended period of time rather than on management opportunities or other issues. The market price of Xperi common stock and/or TiVo common stock might decline as a result of any such failures to the extent that the current market prices reflect a market assumption that the mergers will be completed.

In addition, if the merger agreement is terminated under certain circumstances, Xperi may be required to pay a termination fee of $44,000,000 to TiVo and TiVo may be required to pay a termination fee of $50,800,000 to Xperi, in each case depending on the circumstances surrounding the termination. See “Adoption of the Merger Agreement—The Merger Agreement—Expenses and Termination Fees.” Xperi or TiVo may also be negatively impacted if the merger agreement is terminated and their respective boards seek but are unable to find another business combination or strategic transaction offering equivalent or more attractive consideration than the consideration to be provided in the mergers, or if the respective companies become subject to litigation related to entering into or failing to consummate the mergers, including direct actions by Xperi stockholders or TiVo stockholders, as applicable, against the directors and/or officers of Xperi or TiVo for breaches of fiduciary duty, or derivative actions brought by Xperi or TiVo stockholders in the name of the respective companies.

Xperi and TiVo will be subject to business uncertainties while the mergers are pending.

Uncertainty about the completion or effect of the mergers may affect the relationship between Xperi and TiVo and their respective suppliers, customers, distributors, licensors and licensees and may have an adverse effect on Xperi and/or TiVo, and consequently on the combined company. These uncertainties may cause suppliers, customers, distributors, licensors and others that deal with the parties to seek to change existing business relationships with Xperi or TiVo, as applicable, and to delay or defer decisions concerning Xperi or TiVo. Changes to existing business relationships, including termination or modification, could negatively affect each of Xperi’s and TiVo’s revenues, earnings and cash flow, as well as the market price of their respective common stock.

Xperi and TiVo will be subject to certain contractual restrictions while the mergers are pending.

The merger agreement restricts each of Xperi and TiVo from making certain acquisitions and divestitures, entering into certain contracts, incurring certain indebtedness and expenditures, paying dividends in excess of certain thresholds, repurchasing or issuing securities outside of existing share repurchase and equity award programs, and taking other specified actions until the earlier of the completion of the mergers or the termination of the merger agreement without the consent of the other party. These restrictions may prevent Xperi and/or TiVo from pursuing attractive business opportunities that may arise prior to the completion of the mergers and could have the effect of delaying or preventing other strategic transactions. Adverse effects arising from the

 

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pendency of the mergers could be exacerbated by any delays in consummation of the mergers or the termination of the merger agreement. See “Adoption of the Merger Agreement—The Merger Agreement—Conduct of Business” beginning on page 138.

Third parties may terminate or alter existing contracts or relationships with Xperi or TiVo.

Each of Xperi and TiVo has contracts with customers, suppliers, vendors, distributors, landlords, licensors, joint venture partners, and other business partners which may require Xperi or TiVo, as applicable, to obtain consent from these other parties in connection with the mergers. If these consents cannot be obtained, the counterparties to these contracts and other third parties with which Xperi and/or TiVo currently have relationships may have the ability to terminate, reduce the scope of or otherwise materially adversely alter their relationships with either or both of the parties in anticipation of the mergers, or with the combined company following the mergers. The pursuit of such rights may result in Xperi, TiVo or the combined company suffering a loss of potential future revenue or incurring liabilities in connection with a breach of such agreements and may lose rights that are material to its business. Any such disruptions could limit the combined company’s ability to achieve the anticipated benefits of the mergers. The adverse effect of such disruptions could also be exacerbated by a delay in the completion of the mergers or the termination of the merger agreement.

Xperi and TiVo will incur significant transaction costs in connection with the mergers.

Xperi and TiVo have incurred and expect to incur a number of non-recurring costs associated with the mergers. These costs and expenses include financial advisory, legal, accounting, consulting and other advisory fees and expenses, reorganization and restructuring costs, severance/employee benefit-related expenses, public company filing fees and other regulatory expenses, printing expenses and other related charges. Some of these costs are payable by Xperi and TiVo regardless of whether the mergers are completed. Moreover, under specified circumstances, either Xperi or TiVo may be required to pay an expense reimbursement amount of $10,000,000. Additionally, under specified circumstances, Xperi may be required to pay a termination fee of $44,000,000 to TiVo or TiVo may be required to pay a termination fee of $50,800,000 to Xperi. See “Adoption of the Merger Agreement—The Merger Agreement—Expenses and Termination Fees.”

The combined company will also incur transaction expenses and debt restructuring costs in connection with the mergers, which we refer to as transaction costs. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the merger and the integration of the two companies’ businesses. Although Xperi and TiVo expect that the elimination of duplicative costs, strategic benefits, additional income as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction, merger-related and restructuring costs over time, any net benefit may not be achieved in the near term or at all. Many of these transaction costs will be borne by Xperi or TiVo even if the merger is not completed. As of December 31, 2019, Xperi management estimates that the combined group would incur transaction costs of approximately $95 million comprised of approximately $20 million in TiVo debt breakage costs, approximately $30 million in costs relating to the new debt financing and approximately $45 million in third party advisory fees and other expenses. The combined company will also incur restructuring and integration costs in connection with the mergers. The costs related to restructuring and integration will be expensed as a cost of the ongoing results of operations of either Xperi, TiVo or the combined company. While both Xperi and TiVo have assumed that certain expenses would be incurred in connection with the merger and the other transactions contemplated by the merger agreement, there are many factors beyond their control that could affect the total amount or the timing of the integration and implementation expenses.

Xperi directors and executive officers may have interests in the Xperi merger different from the interests of Xperi stockholders generally and TiVo directors and executive officers may have interests in the TiVo merger different from the interests of TiVo stockholders generally.

Certain of the directors and executive officers of each of Xperi and TiVo negotiated the terms of the merger agreement, the Xperi board recommended that Xperi stockholders vote in favor of the Xperi merger proposal and

 

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the Xperi compensation proposal, and the TiVo board recommended that TiVo stockholders vote in favor of the TiVo merger proposal and the TiVo compensation proposal. These directors and executive officers may have interests in the Xperi merger and the TiVo merger, as applicable, which are different from, or in addition to, or in conflict with, those of Xperi stockholders and TiVo stockholders, generally. These interests include the continued employment of certain executive officers of Xperi and TiVo by the combined company, the continued positions of a number of directors of Xperi and TiVo as directors of HoldCo, the payment of cash retention awards to certain TiVo executive officers, the treatment in the Xperi merger and the TiVo merger of stock options and restricted stock units held by Xperi directors and executive officers or TiVo directors and executive officers, as applicable, the effect of the Xperi merger and the TiVo merger on any employment, severance or change in control arrangements entered into with Xperi directors and executive officers or TiVo directors and executive officers, as applicable, and the indemnification of former Xperi and TiVo directors and officers by HoldCo.

For an estimate of the value of the benefits and financial interests that Xperi’s executive officers may become eligible to receive as a result of their interests in the mergers, assuming, among other things, that the mergers were completed on May 29, 2020 and the employment of each executive officer was terminated either by Xperi without cause or by the executive officer for good reason immediately thereafter, see the section of this joint proxy statement entitled “Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Interests of Xperi Directors and Executive Officers in the Mergers—Merger Related Compensation-Xperi” beginning on page 80.

For an estimate of the value of the benefits and financial interests that TiVo’s executive officers may become eligible to receive as a result of their interests in the mergers, assuming, among other things, that the mergers were completed on May 29, 2020 and the employment of each executive officer was terminated either by Xperi without cause or by the executive officer for good reason immediately thereafter (other than Peter Halt, TiVo’s former Chief Financial Officer, as is noted and whose lack of any reportable compensation or benefits required to be described is explained), see “Adoption of the Merger Agreement—Recommendation of the TiVo Board of Directors—Interests of TiVo Directors and Executive Officers in the Mergers—Merger Related Compensation-TiVo” beginning on page 102.

Xperi stockholders and TiVo stockholders should be aware of these interests when they consider recommendations of the respective Xperi and TiVo boards that they vote in favor of the Xperi merger proposal and Xperi compensation proposal, or the TiVo merger proposal and TiVo compensation proposal, as applicable. The Xperi board was aware of these interests when it determined that the merger agreement and the transactions contemplated thereby were advisable and fair to, and in the best interests of, the Xperi stockholders and recommended that the Xperi stockholders adopt the merger agreement. The interests of Xperi directors and executive officers are described in more detail in the section of this joint proxy statement/prospectus entitled “Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Interests of Xperi Directors and Executive Officers in the Mergers.” Likewise, the TiVo board was aware of these interests when it determined that the merger agreement and the transactions contemplated thereby were advisable and fair to, and in the best interests of, the TiVo stockholders and recommended that the TiVo stockholders adopt the merger agreement. The interests of TiVo directors and executive officers are described in more detail in the section of this joint proxy statement/prospectus entitled “Adoption of the Merger Agreement—Recommendation of the TiVo Board of Directors—Interests of TiVo Directors and Executive Officers in the Mergers.”

Existing Xperi stockholders and TiVo stockholders will have a reduced ownership and voting interest in, and will exercise less influence over management of, HoldCo after the mergers than they did with respect to Xperi and TiVo prior to the mergers.

Xperi stockholders and TiVo stockholders currently have the right to vote in the election of the Xperi board and the TiVo board, respectively, and on other matters affecting the respective companies. Upon the completion of the mergers, each Xperi stockholder and each TiVo stockholder who receives shares of HoldCo common stock in the mergers will become a stockholder of HoldCo with a percentage ownership of, and voting interest in, HoldCo that is smaller than such stockholder’s percentage ownership of, and voting interest in, Xperi or TiVo, as

 

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applicable, immediately prior to the mergers. Immediately following the completion of the mergers, the former Xperi stockholders, as a group, will own approximately 46.5% of HoldCo and the former TiVo stockholders, as a group, will own approximately 53.5% of HoldCo. In particular, Xperi stockholders, as a group, will have less than a majority of the ownership and voting power of HoldCo and, therefore, will be able to exercise less collective influence over the management and policies of HoldCo than they currently exercise over the management and policies of Xperi. In addition, former directors of Xperi and former directors of TiVo will respectively constitute half of the HoldCo board. Accordingly, Xperi stockholders and TiVo stockholders will have less influence on the management and policies of the combined company than they now have on the management and policies of Xperi or TiVo, as applicable.

Shares of HoldCo common stock to be received by Xperi stockholders in the Xperi merger and TiVo stockholders in the TiVo merger will have rights different from the shares of Xperi common stock and TiVo common stock, respectively.

Upon completion of the mergers, Xperi stockholders and TiVo stockholders will no longer be stockholders of Xperi and/or TiVo, as applicable, but will instead be stockholders of HoldCo. The rights of former Xperi stockholders and TiVo stockholders who become HoldCo stockholders will be governed by the HoldCo charter and the HoldCo bylaws, each of which will be adopted, prior to the effective time, in substantially the form attached as Annex D and Annex E, respectively. The rights associated with shares of HoldCo common stock are different from the rights associated with shares of Xperi common stock or TiVo common stock. See “Comparison of Rights of Stockholders.”

Declaration, payment and amounts of dividends, if any, to holders of shares of HoldCo common stock will be uncertain.

The amounts of dividends, if any, that are declared or paid to HoldCo stockholders cannot yet be determined and depends on a number of factors. The HoldCo board will have sole discretion to determine whether any dividends will be declared, when dividends, if any, are declared, and the amounts of such dividends. We expect that such determination would be based on a number of considerations, including HoldCo’s results of operations and capital management plans and the market price of HoldCo common stock, the combined company’s access to capital markets, as well as industry practice and other factors deemed relevant by the HoldCo board. In addition, HoldCo’s ability to pay dividends and the amounts of any dividends ultimately paid in respect of the HoldCo common stock will, in each case, be subject to HoldCo receiving funds, directly or indirectly, from its operating subsidiaries, including Xperi and TiVo. Further, the ability of Xperi and TiVo to make distributions to HoldCo will depend on satisfying Delaware law with respect to such distributions, and the ability of Xperi and TiVo to receive distributions from their own respective subsidiaries will continue to depend on the laws of the jurisdictions in which such subsidiaries are organized. There can be no guarantee that HoldCo stockholders will receive or be entitled to dividends commensurate with the historical dividends of Xperi or TiVo.

The merger agreement contains provisions that may discourage other companies from trying to enter into a strategic transaction with either Xperi or TiVo for greater consideration.

The merger agreement contains provisions that may discourage a third party from submitting a business combination proposal to Xperi or TiVo or both during the pendency of the proposed combination transaction as well as afterward, should the mergers not be consummated, that might result in greater value to Xperi stockholders or TiVo stockholders, as applicable, than the mergers. These merger agreement provisions include a general prohibition on each company from soliciting, or, subject to certain exceptions, entering into discussions with any third party regarding any acquisition or combination proposal or offers for competing transactions, subject to limited exceptions. Further, if either the Xperi board or TiVo board (i) withdraws, qualifies or modifies, or proposes publicly to withdraw, qualify or modify, or fails to make, in each case in any manner adverse to the other party, its approval or recommendation of the Xperi merger proposal or the TiVo merger proposal, as applicable, or (ii) approves or recommends, or proposes publicly to approve or recommend, any acquisition proposal, Xperi or TiVo, as applicable, will still be required to submit the Xperi merger and TiVo

 

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merger, respectively, to a vote of its stockholders at its special meeting unless the merger agreement is earlier terminated in accordance with its terms. For further information, please see the section entitled “Adoption of the Merger Agreement—The Merger Agreement—Changes in Board Recommendations.”

Moreover, under specified circumstances, either Xperi or TiVo may be required to pay an expense reimbursement amount of $10,000,000. Additionally, under specified circumstances, Xperi may be required to pay a termination fee of $44,000,000 to TiVo or TiVo may be required to pay a termination fee of $50,800,000 to Xperi. The obligation to pay the termination fee also may discourage a third party from pursuing an acquisition proposal. For further information, please see the section entitled “Adoption of the Merger Agreement—The Merger Agreement—Expenses and Termination Fees.”

If the merger agreement is terminated and either Xperi or TiVo determines to seek another strategic transaction, Xperi or TiVo, as applicable, may not be able to negotiate a transaction on terms comparable to, or better than, the terms of this transaction.

The market price of the combined company’s common stock may be volatile, and holders of the combined company’s common stock could lose a significant portion of their investment due to drops in the market price of the combined company’s common stock following completion of the mergers.

The market price of the combined company’s common stock may be volatile, and following completion of the mergers stockholders may not be able to resell their HoldCo common stock at or above the price at which they acquired the common stock pursuant to the merger agreement or otherwise due to fluctuations in its market price, including changes in price caused by factors unrelated to the combined company’s operating performance or prospects.

Specific factors that may have a significant effect on the market price for the combined company’s common stock include, among others, the following:

 

   

changes in stock market analyst recommendations or earnings estimates regarding the combined company’s common stock, other companies comparable to it or companies in the industries they serve;

 

   

actual or anticipated fluctuations in the combined company’s operating results or future prospects;

 

   

reaction to public announcements by the combined company;

 

   

strategic actions taken by the combined company or its competitors, such as any contemplated business separation, acquisitions or restructurings;

 

   

failure of the combined company to achieve the perceived benefits of the transactions, including financial results and anticipated synergies, as rapidly as or to the extent anticipated by financial or industry analysts;

 

   

adverse conditions in the financial market or general U.S. or international economic conditions, including those resulting from war, incidents of terrorism and responses to such events; and

 

   

sales of common stock by the combined company, members of its management team or significant stockholders.

The opinions of Xperi’s and TiVo’s financial advisors will not be updated to reflect changes in circumstances between the signing of the merger agreement in December 2019 and the completion of the mergers.

Xperi and TiVo have not obtained updated opinions from their respective financial advisors as of the date of this joint proxy statement/prospectus, and neither Xperi nor TiVo anticipates asking their financial advisors to update their opinions. Changes in the operations and prospects of Xperi or TiVo, general market and economic conditions and other factors that may be beyond the control of Xperi or TiVo, and on which Xperi’s and TiVo’s financial advisor’s opinions were based, may significantly alter the prices of the shares of Xperi common stock

 

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or TiVo common stock by the time the mergers are completed. The opinions do not speak as of the time the mergers will be completed or as of any date other than the date of such opinions. Because Xperi’s and TiVo’s financial advisors will not be updating their opinions, which were issued in connection with the signing of the merger agreement in December 2019, the opinions will not address the fairness of the merger consideration from a financial point of view at the time the mergers are completed. The Xperi board’s recommendation that Xperi stockholders vote “FOR” the Xperi merger proposal and the TiVo board’s recommendation that TiVo stockholders vote “FOR” the TiVo merger proposal, however, are made as of the date of this joint proxy statement/prospectus. For a description of the opinions that Xperi and TiVo received from their respective financial advisors, please refer to “Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Opinion of Xperi’s Financial Advisor” and “Adoption of the Merger Agreement—Recommendation of the TiVo Board of Directors—Opinion of TiVo’s Financial Advisor.”

Xperi and TiVo stockholders will not be entitled to appraisal rights in the mergers.

Appraisal rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. Under the DGCL, stockholders do not have appraisal rights if the shares of stock they hold, as of the record date for determination of stockholders entitled to vote at the meeting of stockholders to act upon a merger, are either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders. Notwithstanding the foregoing, appraisal rights are available if stockholders are required by the terms of the merger agreement to accept for their shares anything other than (a) shares of stock of the surviving corporation, (b) shares of stock of another corporation that will either be listed on a national securities exchange or held of record by more than 2,000 holders, (c) cash instead of fractional shares or (d) any combination of clauses (a)-(c).

Because Xperi common stock is listed on Nasdaq, a national securities exchange, and is expected to continue to be so listed on the record date for the Xperi special meeting, and because Xperi stockholders will receive shares of HoldCo common stock in the Xperi merger, which is expected to be listed on Nasdaq upon the effective time, Xperi stockholders will not be entitled to appraisal rights in the Xperi merger with respect to their shares of Xperi common stock. Similarly, TiVo common stock is listed on Nasdaq and is expected to continue to be so listed on the record date for the TiVo special meeting. Because TiVo stockholders will also receive shares of HoldCo common stock in the TiVo merger, TiVo stockholders will also not be entitled to appraisal rights in the TiVo merger with respect to their shares of TiVo common stock.

The IRS may assert that the Xperi merger and/or the TiVo merger may negatively impact the tax-free status of distributions intended to qualify for tax-free treatment.

In general, a corporation, which we refer to as the distributing corporation, that distributes the stock of another corporation, which we refer to as the controlled corporation, in a transaction that would otherwise qualify for tax-free treatment under Section 355 of the Code may be required to recognize corporate-level gain on the distribution if there is an acquisition of a 50% or greater interest (within the meaning of Section 355(d)(4) of the Code) in either the distributing corporation or the controlled corporation as part of a plan including the distribution. Although there is no current plan or intention to separate any parts of the combined company, Xperi and TiVo currently contemplate that, at some point following the consummation of the mergers and likely no earlier than the first quarter of 2021, the combined company may pursue, subject to the receipt of approval by the HoldCo board and any required regulatory approvals, a separation of the combined company’s product business and IP licensing business in a transaction intended to qualify as tax-free under Section 355 of the Code, resulting in two independent publicly traded companies. It is not expected that Xperi or TiVo would be required to recognize corporate-level gain on such separation transaction in connection with the Xperi merger and/or the TiVo merger, because there would be no acquisition of a 50% or greater interest in Xperi or TiVo. There can be no assurance, however, that the IRS may not take a contrary view. In addition, in the event that the IRS were to

 

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take the view that the Xperi merger and the TiVo merger constitute an acquisition of a 50% or greater interest in Xperi and/or TiVo, HoldCo may be restricted in its ability to implement any contemplated business separation in a tax-efficient manner, as described in “Adoption of the Merger Agreement—Contemplated Business Separation” beginning on page 44.

The effects of health epidemics, including the recent global coronavirus pandemic, have led to periods of significant volatility in various markets and industries and could harm the business and results of operations for each of Xperi and TiVo and the combined company following the completion of the mergers.

The business and results of operations for each of Xperi, TiVo and the combined company could be adversely affected by health epidemics, including the recent coronavirus pandemic. In December 2019, a novel strain of coronavirus, SARS-CoV-2, causing a disease referred to as COVID-19, was reported to have surfaced in Wuhan, China. Since then, coronavirus has spread to many countries worldwide, including the United States.

In March 2020, the World Health Organization declared the coronavirus to be a pandemic. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the coronavirus outbreak on the businesses of Xperi, TiVo and the combined company, and there is no guarantee that efforts by Xperi, TiVo and the combined company to address the adverse impacts of the coronavirus will be effective. The impact to date has included periods of significant volatility in various markets and industries. This volatility could have an adverse impact on Xperi’s and TiVo’s customers and on the companies’ business, financial condition and results of operations. In particular, automotive and consumer electronics industries, as well as other industries that include customers of Xperi and TiVo, have and may continue to be impacted by the coronavirus outbreak and/or other events beyond the control of Xperi, TiVo or the combined company, and further volatility could have an additional negative impact on these industries, customers, Xperi, TiVo, and the combined company.

In addition, recent actions by United States federal, state and foreign governments to address the coronavirus outbreak, including travel bans and school, business and entertainment venue closures, may also have a significant adverse effect on the markets in which Xperi and TiVo conduct their businesses. The extent of impacts resulting from the coronavirus outbreak and other events beyond the control of Xperi, TiVo and the combined company will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus outbreak and actions taken to contain the coronavirus or its impact, among others.

In addition, the coronavirus outbreak could result in business disruption to Xperi or TiVo, and if either company is unable to recover from such a business disruption on a timely basis, the mergers and the combined company’s business and financial conditions and results of operations following the completion of the mergers would be adversely affected. The mergers and efforts to integrate the businesses of Xperi and TiVo, and any contemplated business separation transaction, may also be delayed and adversely affected by the coronavirus outbreak, and become more costly. Each of Xperi, TiVo and the combined company may also incur additional costs to remedy damages caused by such disruptions, which could adversely affect their financial condition and results of operations.

There can be no assurance that the global coronavirus pandemic will not have a material and adverse impact on the business, operating results and financial condition of Xperi and TiVo and, in the future, the combined company. Even after the coronavirus outbreak has subsided, Xperi and TiVo and, in the future, the combined company may continue to experience material and adverse impact on their business, operating results and financial condition as a result of its global economic impact, including any recession that has occurred or may occur in the future. The ultimate impact of the coronavirus pandemic or a similar health epidemic is highly uncertain and subject to change. Xperi and TiVo do not yet know the full extent of potential delays or impacts on our applicable business, operations or the global economy as a whole.

 

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Risks Related to the Combined Company

Failure to successfully integrate the businesses of Xperi and TiVo in the expected time-frame may adversely affect the combined company’s future results.

Xperi and TiVo entered into the merger agreement with the expectation that the merger will result in various benefits, including certain cost savings and operational efficiencies or synergies. To realize these anticipated benefits, the businesses of Xperi and TiVo must be successfully integrated. Historically, Xperi and TiVo have been independent companies, and they will continue to be operated as such until the completion of the merger. The integration may be complex and time consuming and may require substantial resources and effort. The management of the combined company may face significant challenges in consolidating the operations of Xperi and TiVo, integrating the two companies’ technologies, procedures, and policies, as well as addressing the different corporate cultures of the two companies. If the companies are not successfully integrated, the anticipated benefits of the merger may not be realized fully (or at all) or may take longer to realize than expected.

The combined company must successfully combine the businesses of Xperi and TiVo in a manner that permits these cost savings and synergies to be realized. In addition, the combined company must achieve the anticipated savings and synergies in a timely manner and without adversely affecting current revenues and investments in future growth. If the combined company is not able to successfully achieve these objectives (including in a manner that does not negatively affect any contemplated business separation), the anticipated benefits of the mergers may not be realized fully or at all or may take longer to realize than expected. A variety of factors may adversely affect the combined company’s ability to realize the currently expected operating synergies, savings and other benefits of the mergers, including the failure to identify and eliminate duplicative programs and the failure to otherwise integrate Xperi’s or TiVo’s respective businesses, including their technology platforms.

HoldCo has no operating or financial history and the unaudited pro forma condensed combined financial statements included in this joint proxy statement/prospectus are preliminary. Therefore, the actual financial condition and results of operations of HoldCo after the mergers may differ materially.

HoldCo has been recently incorporated in connection with the proposed mergers and has no operating history or revenues. This joint proxy statement/prospectus includes unaudited pro forma condensed combined financial information for HoldCo, which we refer to as the pro forma financial statements, that combine the audited historical consolidated financial statements of Xperi for the year ended December 31, 2019, with the audited historical consolidated financial statements of TiVo for the year ended December 31, 2019, in each case, adjusted to give effect to the mergers, and should be read in conjunction with such financial statements and accompanying notes which are incorporated by reference in this joint proxy statement/prospectus. The unaudited pro forma condensed combined balance sheet of HoldCo as of December 31, 2019, combines the audited historical balance sheets of Xperi and TiVo as of December 31, 2019, and gives pro forma effect to the mergers as if they had been consummated on December 31, 2019. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019, combines the Xperi and TiVo audited consolidated statements of operations for the fiscal year ended December 31, 2019, giving effect to the mergers as if they had been consummated on January 1, 2019. The pro forma financial statements are presented for illustrative purposes only, are based on certain assumptions, address a hypothetical situation and reflect limited historical financial data. The pro forma condensed combined financial information reflects adjustments that were developed using preliminary estimates based on available information and various assumptions, and may be revised as additional information becomes available. The pro forma financial statements do not include, among other things, estimated cost or growth synergies, adjustments related to restructuring or integration activities, future acquisitions or disposals not yet known or probable, including those that may be required by regulatory or governmental authorities in connection with the mergers, or impacts of merger related change in control provisions that are currently not factually supportable and/or probable of occurring. Therefore, the pro forma financial statements are presented for informational purposes only and are not necessarily indicative of what the combined company’s actual financial condition or results of operations would have been had the mergers been

 

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completed on the dates indicated. The final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this joint proxy statement/prospectus. Accordingly, HoldCo’s business, assets, results of operations and financial condition may differ significantly from those indicated by the pro forma financial statements included in this joint proxy statement/prospectus. For more information, see “Unaudited Pro Forma Condensed Combined Financial Information.”

The financial analyses and forecasts considered by Xperi and TiVo and their respective financial advisors may not be realized, which may adversely affect the market price of HoldCo common stock following the completion of the mergers.

In performing their financial analyses and rendering their opinions regarding the fairness, from a financial point of view, of the Xperi exchange ratio and TiVo exchange ratio, as applicable, the respective financial advisor to Xperi and TiVo relied on, among other things, internal stand-alone financial analyses and forecasts as separately provided to each respective financial advisor by Xperi and TiVo. See “Adoption of the Merger Agreement—Financial Forecasts—Certain TiVo Forecasts” and “Adoption of the Merger Agreement—Financial Forecasts—Certain Xperi Forecasts.” These analyses and forecasts were prepared by, or as directed by, the managements of Xperi or TiVo, as applicable. None of these analyses or forecasts were prepared with a view towards public disclosure or compliance with the published guidelines of the SEC, U.S. GAAP, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts. These projections are inherently based on various estimates and assumptions that are subject to the judgment of those preparing them. These projections are also subject to significant economic, competitive, industry and other uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are beyond the control of Xperi and TiVo. As a result of these contingencies, there can be no assurance that the prospective financial forecasts of Xperi or TiVo will be realized or that actual results will not be significantly higher or lower than projected. In view of these uncertainties, the inclusion of the prospective financial forecasts of Xperi and TiVo in this joint proxy statement/prospectus should not be regarded as an indication that the Xperi board, the TiVo board, Xperi, TiVo, HoldCo, Centerview, LionTree or any other recipient of this information considered, or now considers, it to be an assurance of the achievement of future results.

Combining the businesses of Xperi and TiVo may be more difficult, costly or time-consuming than expected, which may adversely affect the combined company’s results and negatively affect the value of HoldCo common stock following the mergers.

Xperi and TiVo have entered into the merger agreement because each believes that the mergers will be beneficial to its respective company and stockholders, as applicable, and that combining the businesses of Xperi and TiVo will produce benefits and cost savings. Xperi and TiVo have historically operated as independent companies and will continue to do so until the completion of the mergers. Following the completion of the mergers, HoldCo’s management will need to integrate Xperi’s and TiVo’s respective business. The combination of two independent businesses is a complex, costly and time-consuming process and the management of the combined company may face significant challenges in implementing such integration, many of which may be beyond the control of management, including, without limitation:

 

   

latent impacts resulting from the diversion of Xperi’s and TiVo’s respective management team’s attention from ongoing business concerns as a result of the devotion of management’s attention to the mergers and performance shortfalls at one or both of the companies;

 

   

ongoing diversion of the attention of management from the operation of the combined company’s business as a result of any contemplated business separation;

 

   

difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects;

 

   

the possibility of faulty assumptions underlying expectations regarding the integration process, including with respect to the intended tax efficient transactions;

 

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unanticipated issues in integrating information technology, communications programs, financial procedures and operations, and other systems, procedures and policies;

 

   

difficulties in managing a larger combined company, addressing differences in business culture and retaining key personnel;

 

   

unanticipated changes in applicable laws and regulations;

 

   

managing tax costs or inefficiencies associated with integrating the operations of the combined company and any contemplated tax efficient separation transaction;

 

   

uncertainty that current and prospective employees of Xperi and TiVo may experience about their roles within the combined company following the mergers and following any contemplated business separation, which may have an additional adverse effect on the ability of each of Xperi and TiVo to attract or retain key management personnel and other key employees;

 

   

coordinating geographically separate organizations; and

 

   

unforeseen expenses or delays associated with the mergers.

Some of these factors will be outside of the control of Xperi and TiVo and any one of them could result in increased costs and diversion of management’s time and energy, as well as decreases in the amount of expected revenue which could materially impact our business, financial conditions and results of operations. The integration process and other disruptions resulting from the mergers may also adversely affect the combined company’s relationships with employees, suppliers, customers, distributors, licensors and others with whom Xperi and TiVo have business or other dealings, and difficulties in integrating the businesses or regulatory functions of Xperi and TiVo could harm the reputation of the combined company.

If the combined company is not able to successfully combine the businesses of Xperi and TiVo in an efficient, cost-effective and timely manner, the anticipated benefits and cost savings of the mergers (including any contemplated business separation) may not be realized fully, or at all, or may take longer to realize than expected, and the value of HoldCo common stock, the revenues, levels of expenses and results of operations may be affected adversely. If the combined company is not able to adequately address integration challenges, the combined company may be unable to successfully integrate Xperi’s and TiVo’s operations, effect any contemplated business separation or realize the anticipated benefits of the transaction.

Whether or not the mergers are completed, the announcement and pendency of the mergers will divert significant management resources to complete the mergers, which could have an adverse effect on their respective businesses, financial results, and/or market prices.

Whether or not the mergers are completed, the announcement and pendency of the mergers could cause disruptions in the businesses of Xperi and TiVo by directing the attention of management of each of Xperi and TiVo toward the completion of the mergers. Xperi and TiVo have each diverted significant management resources in an effort to complete the mergers and are each subject to restrictions contained in the merger agreement on the conduct of their respective businesses. If the efforts and actions required of Xperi and TiVo in order to consummate the mergers and the other transactions contemplated by the merger agreement are more difficult, costly or time consuming than expected, such efforts and actions could result in the additional diversion of each company’s management’s attention and resources or the disruption or interruption of, or the loss of momentum in, each company’s ongoing businesses, which could adversely affect the business and financial results of Xperi or TiVo, as applicable. If the mergers are not completed, Xperi and TiVo will have incurred significant costs, including the diversion of management resources, for which they will have received little or no benefit.

 

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HoldCo’s future results will suffer if it does not effectively manage its expanded operations following the mergers.

Following the mergers, the size of the business of HoldCo will increase significantly beyond the current size of either Xperi or TiVo’s current businesses. HoldCo’s future success depends, in part, upon its ability to manage this expanded business, which may pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurance that the combined company will be successful or that it will realize the expected operating efficiencies, cost savings, revenue enhancements and other benefits currently anticipated from the mergers.

HoldCo will incur significant costs in connection with the integration of the combined company.

There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the mergers. While both Xperi and TiVo have assumed that a certain level of expenses would be incurred in connection with the mergers and the other transactions contemplated by the merger agreement, there are many factors beyond their control that could affect the total amount of, or the timing of, anticipated expenses with respect to the integration and implementation of the combined businesses.

There may also be additional unanticipated significant costs in connection with the mergers that the combined company may not recoup. These costs and expenses could reduce the benefits and additional income HoldCo expects to achieve from the mergers. Although HoldCo expects that these benefits will offset the transaction expenses and implementation costs over time, this net benefit may not be achieved in the near term or at all.

The determination to proceed with any contemplated business separation will not be made at the time of the consummation of the mergers and the expected benefits (including the tax treatment) of such transaction, if it occurs, will be uncertain.

Although there is no current plan or intention to separate any parts of the combined company, Xperi and TiVo currently contemplate that, following the mergers, the combined company may pursue a separation of the combined company’s product business and IP licensing business through a tax-efficient transaction, resulting in two independent, publicly traded companies. However, consummation of the mergers is not conditioned on any contemplated business separation transaction and the determination as to whether to pursue such transaction will be made by the HoldCo board following the consummation of the mergers. Xperi stockholders and TiVo stockholders are being asked to vote to adopt the merger agreement with respect to the proposed mergers and are not being asked to vote on any contemplated business separation transaction. In the event that the HoldCo board determines, following the completion of the mergers, to proceed with any contemplated business separation transaction, we currently anticipate that such contemplated business separation transaction, if undertaken, would be effectuated through a pro-rata spin-off transaction intended to qualify as tax-free under Section 355 of the Code, in which HoldCo stockholders, at such time, would receive shares of capital stock in the resulting spin-off company. The holders of Xperi common stock and TiVo common stock will not know whether any contemplated business separation will occur at the time they are asked to vote on the Xperi merger and/or TiVo merger at the Xperi special meeting and/or the TiVo special meeting, respectively, nor at the time of the mergers. Following the consummation of the mergers, the HoldCo board may ultimately determine to abandon any contemplated business separation transaction, and such determination could have an adverse impact on the value of the combined company. Additionally, there are many determinations with respect to undertaking a contemplated business separation that, by their nature, cannot be determined until the completion of the mergers, including definitive determinations with regard to the capital structure of the two businesses and allocation of liabilities among them. As such, there are many factors that could, through the closing and the period following the closing and prior to the determination by the HoldCo board to proceed with any contemplated business separation, impact the structure or timing of, the anticipated benefits from, or determination to ultimately proceed with, any contemplated business separation, including, among others, global economic conditions, instability in credit

 

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markets, declining consumer and business confidence, fluctuating commodity prices and interest rates, volatile exchange rates, tax considerations, and other challenges that could affect the global economy, specific market conditions in one or more of the industries of the businesses proposed to be separated, and changes in the regulatory or legal environment. Such changes could adversely impact the value of a contemplated business separation transaction to the combined company’s stockholders. Additionally, to the extent the HoldCo board determines to proceed with any contemplated business separation, the consummation of such transaction is a complex, costly and time-consuming process, and there can be no guaranty that the intended benefits (including the tax treatment), of such transaction will be achieved. An inability to realize the full extent of the anticipated benefits (including the tax treatment) of any contemplated business separation, as well as any delays encountered in the process, could have an adverse effect upon the revenues, level of expenses and operating results of the product business, the IP licensing business and/or the combined company.

The combined company will be exposed to the risks related to international sales and operations.

Xperi and TiVo each derive a large portion of their total revenue from operations outside of the United States. For example, for the fiscal year ended December 31, 2019, Xperi derived approximately 74% of its total revenue from sales to customers outside of the United States and TiVo derived approximately 33% of its total revenue from sales to customers outside of the United States. Therefore, the combined company will have exposure to risks of operating in many foreign countries, including:

 

   

difficulties and costs associated with complying with a wide variety of complex laws, treaties and regulations;

 

   

unexpected changes in political or regulatory environments;

 

   

labor compliance and costs associated with a global workforce;

 

   

earnings and cash flows that may be subject to tax withholding requirements or the imposition of tariffs;

 

   

exchange controls or other restrictions;

 

   

restrictions on, or difficulties and costs associated with, the repatriation of cash from foreign countries to the United States;

 

   

political and economic instability;

 

   

import and export restrictions and other trade barriers;

 

   

difficulties in maintaining overseas subsidiaries and international operations;

 

   

difficulties in obtaining approval for significant transactions;

 

   

government limitations on foreign ownership;

 

   

government takeover or nationalization of business;

 

   

government mandated price controls; and

 

   

fluctuations in foreign currency exchange rates.

Any one or more of the above factors could adversely affect the international operations of the combined company and could significantly affect the combined company’s results of operations, financial condition and cash flows.

The results of operations of the combined company will be dependent to a large extent upon the global economy. Geopolitical factors such as terrorist activities, armed conflict or global health conditions that adversely affect the global economy may adversely affect the operating results and financial condition of the combined company.

 

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Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition or results of operations.

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. For example, legislation enacted in 2017, informally known as the Tax Cuts and Jobs Act, enacted many significant changes to the U.S. tax laws. Future guidance from the IRS and other tax authorities with respect to the Tax Cuts and Jobs Act may affect us, and certain aspects of the Tax Cuts and Jobs Act could be repealed or modified in future legislation. In addition, it is uncertain if and to what extent various states will conform to the Tax Cuts and Jobs Act or any newly enacted federal tax legislation. Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses under the Tax Cuts and Jobs Act or future reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. tax expense.

Our ability to use net operating losses to offset future taxable income may be subject to limitations.

As of December 31, 2019, TiVo had U.S. federal and state net operating losses of approximately $1.0 billion and $1.1 billion. A portion of the federal and state net operating loss carryforwards will begin to expire, if not utilized, in 2020. Net operating losses that expire unused will be unavailable to offset future income tax liabilities. Under the Tax Cuts and Jobs Act, federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such federal net operating losses is limited. It is uncertain if and to what extent various states will conform to the Tax Cuts and Jobs Act. In addition, under Sections 382 and 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than fifty-percent (50%) change, by value, in its equity ownership over a three (3)-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited. TiVo or HoldCo may experience ownership changes in the future as a result of subsequent shifts in TiVo’s or HoldCo’s stock ownership, some of which may be outside of TiVo’s or HoldCo’s control. If an ownership change occurs and HoldCo’s ability to utilize TiVo’s net operating loss carryforwards is materially limited, it would harm HoldCo’s future operating results by effectively increasing HoldCo’s future tax obligations. In addition, at the state level, there may be periods during which the use of net operating loss carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed by HoldCo.

Use of HoldCo stock for future acquisitions may be limited.

HoldCo’s ability to use HoldCo stock for future acquisitions without triggering an ownership change for the purposes of Sections 382 and 383 of the Code will likely be limited for three (3) years following the mergers.

Stock transfer restrictions in the HoldCo certificate of incorporation may act as an anti-takeover device.

The HoldCo certificate of incorporation includes certain transfer restrictions intended to preserve certain tax attributes of HoldCo. Such transfer restrictions will apply to future transfers made by 4.91% stockholders, transferees related to a 4.91% stockholder, transferees acting in coordination with a 4.91% stockholder, or transfers that would result in a stockholder becoming a 4.91% stockholder in order to avoid potential limitation of such tax attributes pursuant to Section 382 of the Code. Such transfer restrictions will expire on the earlier of (i) the repeal of Section 382 or any successor statute if the HoldCo board of directors determines that such restrictions are no longer necessary or desirable for the preservation of certain tax benefits, (ii) the beginning of a taxable year to which the HoldCo board of directors determines that no tax benefits may be carried forward, (iii) the third anniversary of the mergers, or (iv) such other date as the HoldCo board of directors shall fix in accordance with the certificate of incorporation.

The transfer restrictions described above could make it more difficult for a third party to acquire, or could discourage a third party from acquiring, a large block of our common stock. This may adversely affect the

 

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marketability of our common stock by discouraging existing or potential investors from acquiring our stock or additional shares of our stock. It is also possible that the transfer restrictions could delay or frustrate the removal of incumbent directors and could make more difficult a merger, tender offer or proxy contest involving us, or impede an attempt to acquire a significant or controlling interest in us, even if such events might be beneficial to us and our stockholders.

The combined company may be exposed to increased litigation, which could have an adverse effect on the combined company’s business and operations.

The combined company may be exposed to increased litigation from stockholders, customers, suppliers, consumers and other third parties due to the combination of Xperi’s business and TiVo’s business following the merger. Such litigation may have an adverse impact on the combined company’s business and results of operations or may cause disruptions to the combined company’s operations.

Risks Related to Xperi’s Business

You should read and consider risk factors specific to Xperi’s businesses that will also affect the combined company after the completion of the mergers. These risks are described in Part I, Item 1A of Xperi’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and in other documents that are incorporated by reference into this document. See “Where You Can Find More Information” for the location of information incorporated by reference in this joint proxy statement/prospectus.

Risks Related to TiVo’s Business

You should read and consider risk factors specific to TiVo’s businesses that will also affect the combined company after the completion of the mergers. These risks are described in Part I, Item 1A of TiVo’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and in other documents that are incorporated by reference into this document. See “Where You Can Find More Information” for the location of information incorporated by reference in this joint proxy statement/prospectus.

 

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THE COMPANIES

Xperi Corporation

Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

Telephone: (408) 321-6000

Xperi Corporation licenses its innovative products, technologies and inventions to global electronics companies which, in turn, integrate the technologies into their own consumer electronics and semiconductor products. Xperi’s technologies and inventions are widely adopted and used every day by millions of people. Xperi’s audio and imaging technologies have shipped in billions of devices for the home, mobile and automotive markets. Xperi’s semiconductor packaging and interconnect technologies have been licensed to more than 100 customers and have shipped in over a hundred billion semiconductor chips.

Xperi common stock is listed on Nasdaq under the symbol “XPER.”

Additional information about Xperi and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 211.

TiVo Corporation

TiVo Corporation

2160 Gold Street

San Jose, California 95002

Telephone: (408) 519-9100

TiVo Corporation provides an intellectual property portfolio and products to help consumers enjoy watching their favorite entertainment. TiVo’s technologies enable an integrated entertainment experience, making entertainment content easy to find, watch and enjoy. TiVo’s product business serves up the best movies, video and shows from across live TV, on demand, streaming services and countless apps, helping people discover what to watch as they wish. For content creators and advertisers, TiVo’s machine learning for personalized content recommendations, conversational voice solution and targeted advertising methodologies help deliver a passionate group of watchers to increase viewership and engagement across online video, TV and other entertainment viewing platforms. TiVo’s intellectual property business provides a global portfolio of thousands of patents that underlie this entertainment platform as well as across the broader video landscape.

TiVo common stock is listed on Nasdaq under the symbol “TIVO.”

Additional information about TiVo and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 211.

XRAY-TWOLF HoldCo Corporation

XRAY-TWOLF HoldCo Corporation

c/o Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

Telephone: (408) 321-6000

c/o TiVo Corporation

2160 Gold Street

San Jose, California 95002

Telephone: (408) 519-9100

 

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XRAY-TWOLF HoldCo Corporation is a Delaware corporation that is jointly owned by Xperi and TiVo and was formed on December 17, 2019 for the purpose of effecting the mergers. To date, HoldCo has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement in connection with the mergers.

As of the completion of the mergers, Xperi and TiVo will each become subsidiaries of HoldCo and HoldCo common stock will be listed on Nasdaq under the symbol “XPER.” The business of HoldCo will be the combined businesses currently conducted by Xperi and TiVo.

Xperi Merger Sub Corporation

Xperi Merger Sub Corporation

c/o Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

Telephone: (408) 321-6000

c/o TiVo Corporation

2160 Gold Street

San Jose, California 95002

Telephone: (408) 519-9100

Xperi Merger Sub Corporation is a Delaware corporation and wholly owned subsidiary of HoldCo that was formed on December 17, 2019 for the purpose of effecting the mergers. To date, Xperi Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement in connection with the mergers. Pursuant to the merger agreement, Xperi Merger Sub will be merged with and into Xperi, with Xperi surviving the merger as a subsidiary of HoldCo.

TiVo Merger Sub Corporation

TiVo Merger Sub Corporation

c/o Xperi Corporation

3025 Orchard Parkway

San Jose, California 95134

Telephone: (408) 321-6000

c/o TiVo Corporation

2160 Gold Street

San Jose, California 95002

Telephone: (408) 519-9100

TiVo Merger Sub Corporation is a Delaware corporation and wholly owned subsidiary of HoldCo that was formed on December 17, 2019 for the purpose of effecting the mergers. To date, TiVo Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the merger agreement in connection with the mergers. Pursuant to the merger agreement, TiVo Merger Sub will be merged with and into TiVo, with TiVo surviving the TiVo merger as a subsidiary of HoldCo.

 

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XPERI PROPOSAL 1 AND TIVO PROPOSAL 1:

ADOPTION OF THE MERGER AGREEMENT

The Mergers

At the effective time, Xperi Merger Sub will be merged with and into Xperi, with Xperi surviving the Xperi merger as a subsidiary of HoldCo, and TiVo Merger Sub will be merged with and into TiVo, with TiVo surviving the TiVo merger as a subsidiary of HoldCo. As a result, among other things, HoldCo will become the ultimate parent of Xperi, TiVo and their respective subsidiaries.

Subject to the terms and conditions set forth in the merger agreement, Xperi stockholders will have the right to receive, with respect to each share of Xperi common stock they hold at the effective time, one (1) share of HoldCo common stock and TiVo stockholders will have the right to receive, with respect to each share of TiVo common stock they hold at the effective time, 0.455 shares of HoldCo common stock, with cash paid in lieu of fractional shares of HoldCo common stock.

The merger agreement does not contain any provision that would adjust the applicable exchange ratios based on fluctuations in the market value of either company’s common stock. Because of this, the implied value of the stock consideration to Xperi stockholders and TiVo stockholders will fluctuate between now and the completion of the mergers and will depend on the market value of HoldCo common stock at the time the mergers are completed, which will in turn be affected by the market value of the Xperi and TiVo common stock at such time.

Contemplated Business Separation

Although there is no current plan or intention to separate any parts of the combined company, Xperi and TiVo currently contemplate that, in the period of time following the consummation of the mergers, a combined company may pursue, subject to the receipt of approval by the HoldCo board and any required regulatory approvals, the separation of the combined company’s product business and IP licensing business through a tax-efficient transaction, resulting in two independent, publicly traded companies. Xperi and TiVo currently anticipate that any contemplated business separation transaction, if undertaken, will be consummated no earlier than the first quarter of 2021, in the form of a pro-rata spin-off transaction intended to qualify as tax-free under Section 355 of the Code, in which HoldCo stockholders, at such time, would receive shares of capital stock in the resulting spin-off company. The HoldCo board may approve any contemplated business separation or may determine to abandon the exploration or pursuit of a separation of the product business or the IP licensing business, respectively.

Product Business

It is currently contemplated that the product business will consist of the businesses that comprise Xperi’s product business and that comprise TiVo’s product business.

IP Licensing Business

It is currently contemplated that the IP licensing business will consist of the businesses that comprise Xperi’s IP licensing businesses and the businesses that comprise TiVo’s IP licensing business.

IT SHOULD BE NOTED THAT THE CONSUMMATION OF THE MERGERS IS NOT CONDITIONED ON THE DETERMINATION TO PROCEED WITH ANY CONTEMPLATED BUSINESS SEPARATION TRANSACTION DESCRIBED HEREIN AND ANY SUCH DETERMINATION TO PROCEED WITH ANY CONTEMPLATED BUSINESS SEPARATION WILL ONLY BE MADE, IF AT ALL, AFTER CONSUMMATION OF THE MERGERS. THE HOLDCO BOARD MAY, AT ANY TIME PRIOR TO THE

 

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CONSUMMATION OF ANY CONTEMPLATED BUSINESS SEPARATION, DETERMINE TO ABANDON SUCH TRANSACTION, AND NO ASSURANCE CAN BE GIVEN THAT SUCH TRANSACTION WILL OCCUR, EITHER IN THE CURRENTLY CONTEMPLATED FORM DESCRIBED HEREIN OR AT ALL. XPERI STOCKHOLDERS AND TIVO STOCKHOLDERS ARE BEING ASKED TO VOTE TO ADOPT THE MERGER AGREEMENT WITH RESPECT TO THE PROPOSED MERGERS AND ARE NOT BEING ASKED TO VOTE ON ANY CONTEMPLATED BUSINESS SEPARATION TRANSACTION. IN THE EVENT THAT THE HOLDCO BOARD DETERMINES, FOLLOWING THE COMPLETION OF THE MERGERS, TO PROCEED WITH ANY CONTEMPLATED BUSINESS SEPARATION TRANSACTION, WE CURRENTLY ANTICIPATE THAT SUCH CONTEMPLATED BUSINESS SEPARATION TRANSACTION, IF UNDERTAKEN, WOULD BE EFFECTUATED THROUGH A PRO-RATA SPIN-OFF TRANSACTION INTENDED TO QUALIFY AS TAX-FREE UNDER SECTION 355 OF THE CODE, IN WHICH HOLDCO STOCKHOLDERS, AT SUCH TIME, WOULD RECEIVE SHARES OF CAPITAL STOCK IN THE RESULTING SPIN-OFF COMPANY. FOR A FURTHER DISCUSSION OF THE RISKS RELATED TO A CONTEMPLATED BUSINESS SEPARATION TRANSACTION, SEE “RISK FACTORS—THE DETERMINATION TO PROCEED WITH ANY CONTEMPLATED BUSINESS SEPARATION WILL NOT BE MADE AT THE TIME OF THE CONSUMMATION OF THE MERGERS AND THE EXPECTED BENEFITS (INCLUDING THE TAX TREATMENT) OF SUCH TRANSACTION, IF IT OCCURS, WILL BE UNCERTAIN” BEGINNING ON PAGE 38.

Background of the Mergers

The management and boards of directors of Xperi and TiVo have regularly reviewed their respective companies’ results of operations and competitive positions in the industries in which they operate as well as the strategic options of their businesses in light of economic and regulatory conditions, among other things, including whether the continued execution of their respective strategies as stand-alone companies or the possible sale to, or a combination with, a third party offers the best avenue to enhance stockholder value.

As part of this review for TiVo, in February 2018, representatives of LionTree had discussions with the TiVo board regarding TiVo’s position in the industry, valuation perspectives and the range of strategic and financial alternatives available to TiVo, including, but not limited to, potential strategic acquisitions, potential dispositions, potential business combinations and other scenarios available to TiVo. Following such discussions, on February 27, 2018, TiVo announced its fourth quarter and full year 2017 financial results and concurrently announced that TiVo had begun a process of evaluating a wide range of strategic alternatives to realize long-term stockholder value. Over the next fourteen months, prior to commencing discussions with Xperi, TiVo engaged in a variety of discussions with 48 potential counterparties regarding potential transactions including the sale of TiVo as a whole, the sale of TiVo’s IP licensing business, the sale of TiVo’s product business, and potential strategic investments in TiVo as a stand-alone company, among others. Of such 48 potential counterparties, 27 were strategic and 21 were private equity/financial. TiVo executed nondisclosure agreements with a total of 26 of such potential counterparties. After providing confidential information on its business, TiVo received nine preliminary offers including offers for TiVo’s whole business, parts of its business and other offers as to different transactions including minority convertible preferred stock financing transactions, and the strategic committee of the TiVo board, a standing committee of the TiVo board not formed for the purpose of evaluating any specific transaction and consisting of directors Hartenstein, Rau (prior to his service and again after his service as TiVo’s interim chief executive officer) and Welling, together with representatives of LionTree and TiVo, engaged in multiple discussions with the various potential counterparties over time. None of the discussions, resulted in a mutually agreeable transaction for various reasons, including among others (i) the TiVo board’s perception that some of the proposed transactions lacked certainty of completion, (ii) the TiVo board’s perception that, in a sale of either TiVo’s IP licensing business or a sale of TiVo’s whole business, the full value potential of the IP licensing business and the whole business was likely not being captured by some of the proposed transactions based on TiVo’s ongoing intellectual property litigation, and (iii) the TiVo board’s perception of complexities involving certain potential counterparties with respect to the timing on which the counterparties could proceed with a transaction and attendant uncertainties and thus risks to TiVo presented by such timing. While the wide-

 

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ranging discussions did not result in a mutually agreeable transaction with any of such potential counterparties, such discussions informed the TiVo board of, among other things, the market’s perception, prospects and potential future strategic interest relating to each of TiVo’s IP licensing and product businesses on both a combined and independent basis.

As part of this review for Xperi, in October 2018 Xperi began working with a nationally recognized investment bank to explore the potential sale of Xperi’s IP licensing business based on Xperi’s view that separating its product licensing and IP licensing businesses could better position each of them to independently pursue their own strategic initiatives. Between October 2018 and May 2019 Xperi contacted 20 potential buyers and executed nondisclosure agreements with 11 of them. None of these 11 nondisclosure agreements include provisions typically referred to as “Don’t Ask, Don’t Waive” that were in effect as of the date of this joint proxy statement / prospectus. After providing confidential information on its IP licensing business, Xperi received three preliminary offers for this business, none of which resulted in a mutually agreeable transaction due, in part, to none of the potential buyers ascribing a valuation to Xperi’s IP licensing business in excess of its cumulative existing under contract net cash flows. Ultimately, Xperi discontinued this sale process and the engagement with the nationally recognized investment bank was subsequently terminated.

On May 9, 2019, concurrently with TiVo’s announcement of its first quarter 2019 financial results, TiVo announced its plans to separate the IP licensing and product businesses. Informed by the extensive strategic alternatives review process, this decision was based on the belief that both businesses would be better positioned independently. However, the TiVo board expressed its continuing openness to strategic transactions that could create additional stockholder value, and discussions continued with potential counterparties with respect to various potential transactions over the ensuing six months. TiVo also continued its efforts to separate its IP licensing and product businesses during such time period.

On June 6, 2019, representatives of TiVo contacted Xperi to discuss a potential transaction involving TiVo’s IP licensing business. Shortly thereafter, TiVo and Xperi entered into a non-disclosure agreement on June 14, 2019 to facilitate further discussions regarding TiVo’s IP licensing business.

On July 9, 2019, representatives of TiVo made a management presentation on its IP licensing business to representatives of Xperi in Calabasas, California, following which Xperi was provided access to an electronic data room containing select business and legal diligence documents.

On July 25, 2019, the TiVo board met and received an update from representatives of LionTree on the current status of certain discussions with third parties related to strategic alternatives for each of the IP licensing and product businesses. Representatives from LionTree reviewed its summary of negotiations to date and analysis of the financial terms contained in (1) two non-binding indications of interest for the sale of the IP licensing business submitted by two potential counterparties (one strategic and one financial), and (2) one proposal for the acquisition of certain assets of the product business. Xperi did not submit an indication of interest. After discussion of each of the proposals, the TiVo board authorized a counterproposal to the strategic counterparty with respect to the sale of the IP licensing business. While discussions occurred with such counterparty over the ensuing approximately six weeks, the counterparty ultimately decided not to pursue the proposed transaction.

In August 2019, Xperi began working with, and subsequently engaged, Centerview to evaluate a range of potential strategic transactions, including, but not limited to, a potential separation of Xperi’s IP licensing and product licensing businesses as well as various other business combination transactions. As part of this evaluation, Centerview worked with Xperi to evaluate a range of strategic transactions involving TiVo, including a business combination transaction structured as an all-stock merger of equals transaction with TiVo followed by a separation of the combined company’s IP and product businesses. On August 8, 2019 the Xperi board met and approved engaging Centerview as financial advisor due, in part, to the fact that the Xperi board had familiarity with Centerview based on a prior engagement and believed Centerview would be a good fit for this engagement

 

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and their knowledge of Xperi, expertise in the technology sector and experience in advising on complex strategic transactions. In making its decision, the Xperi board noted that Centerview did not have any prior relationships with TiVo.

On August 12, 2019, representatives of Xperi communicated to representatives of TiVo that Xperi was interested in continuing discussions regarding a range of potential transactions with TiVo and that Xperi was working with Centerview to assist them with evaluating such transactions.

In the following weeks, representatives of Centerview and LionTree had several conversations regarding potential transactions involving Xperi and TiVo during which LionTree provided additional detail regarding, among other things, the standalone separation plan TiVo was pursuing and the related timeline. In these discussions, Centerview indicated that Xperi had also considered a range of strategic alternatives, including a separation of its IP licensing and product businesses. Centerview also outlined the potential for a business combination transaction followed by a subsequent separation of the combined company’s IP and product businesses.

On August 28, 2019, Mr. Kirchner called Mr. Shull to discuss potential transactions involving Xperi and TiVo. Mr. Kirchner and Mr. Shull agreed to reconvene in person at TiVo’s offices to discuss these transaction alternatives further.

On August 30, 2019, the Chief Executive Officers of Xperi and TiVo held a meeting to discuss the value proposition and growth potential of each of their respective companies and how a potential business combination transaction between Xperi and TiVo could enhance such strategic priorities. The Chief Executive Officers agreed to continue discussions and have further preliminary discussions with their legal and financial advisors and boards of directors.

On September 5, 2019, Mr. Shull and representatives of LionTree discussed with the TiVo strategic committee, on a telephone conference call, high level views on Xperi based on public information. Following the discussion, the strategic committee recommended continuing discussions regarding a potential business combination transaction between the two companies, while continuing to move forward on the previously announced separation of its IP licensing and product businesses.

On September 8, 2019, representatives from LionTree held a telephone conference call with representatives from Centerview during which LionTree informed Centerview that the TiVo board had authorized TiVo’s management to continue discussions with Xperi regarding potential transactions involving the two companies.

On September 9, 2019, the Chief Executive Officers of Xperi and TiVo held a telephone conference call to further discuss the strategic rationale of potential transactions involving the two companies.

On September 10, 2019, Xperi and TiVo entered into an amendment to the nondisclosure agreement to enable a greater mutual exchange of information between the parties in support of their consideration of potential transactions between the two companies.

On September 17, 2019, representatives of TiVo, Xperi, LionTree and Centerview held an in-person meeting where the management of TiVo and Xperi each made presentations with respect to their respective IP licensing and product businesses, operations and prospects. At this meeting, Centerview also outlined the preliminary framework and timetable for a potential business combination, including a potential subsequent separation of the then-combined IP licensing and product businesses. In addition, further diligence information was shared between the parties at the meeting.

Following the foregoing management presentations, during the last two weeks of September, Xperi’s and TiVo’s management discussed with their respective boards and financial advisers the advisability of continuing

 

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discussions regarding a potential business combination transaction and the potential subsequent separation of the combined IP licensing and product businesses thereafter. Following these discussions, Xperi and TiVo each confirmed that they should collectively continue to evaluate a potential transaction, in particular the strategic fit and potential for revenue and cost synergies as a result of the combination as well as the feasibility and benefits of a potential future separation of the combined product and IP businesses.

On September 23, 2019, Mr. Kirchner and Mr. Shull met for dinner in Calabasas, California, followed by in-person meetings on September, 24 to discuss transaction structures for a potential business combination between TiVo and Xperi as well as potential strategy on integration of the two companies.

In late September and October 2019, representatives of TiVo, Xperi, LionTree and Centerview held several telephone conference calls and in-person meetings to continue their respective preliminary diligence exercises, including a review of Xperi’s IP and product revenue and financial plans, TiVo’s financial plan and IP litigation status, TiVo’s separation considerations and tax matters related thereto. The parties worked collaboratively to identify and quantify the potential revenue synergies and cost synergies from the proposed business combination transaction. The parties also provided each other with their respective financial models and engaged in a review and discussions around those respective models. The Xperi model was a preliminary long range plan for 2020-2024 with the caveat that the Xperi board had not yet approved the shared models and that it would be considered in the October 29 meeting as part of Xperi’s regular planning cycle. The final board-approved long range plan was provided to TiVo on October 29. The TiVo model was a preliminary long range plan for 2020-2022 for the TiVo product and IP licensing businesses on a separated basis, with the caveat that the TiVo board had not yet approved the shared models and that it would be considered in the TiVo board’s November meeting as part of TiVo’s regular planning cycle. The final board-approved long range plan was provided to Xperi on November 14, 2019. As part of these discussions, TiVo and representatives of LionTree indicated that, in light of their planned separation as well as the potential proceeds they expected as a result of a future resolution of certain pending litigation matters, in order for the TiVo board to consider a potential all-stock combination transaction, TiVo stockholders would either require a form of contingent-value right or would need to own substantially more than 50% of the combined company (which would have implied a premium to their then-current share price based on the prevailing trading prices of Xperi and TiVo at such time).

On October 1, 2019, Mr. Kirchner and Mr. Shull met in San Francisco, California to further discuss revenue synergies, strategies on the proposed business separations and restructuring and also execution complexity and timing for a potential transaction between the two companies.

On October 29, 2019, the Xperi board met by telephone to discuss the status of discussions with TiVo. Representatives of Centerview and Skadden attended. Management presented the preliminary long-range plan for 2020-2024 previously provided to TiVo and, following discussions, the Xperi board approved such forecasts. Xperi management also reviewed for the Xperi board the strategic rationale for a combination with TiVo as well as the potential financial synergies that were developed in collaboration with TiVo management. Representatives of Centerview discussed a range of strategic alternatives available to Xperi, including a potential combination with TiVo. Representatives of Centerview reviewed the pro forma implications of a potential transaction based on the financial forecasts provided by TiVo and Xperi in addition to the estimated synergies that may be realized by such a combination. Representatives from Centerview also noted that the business combination transaction with TiVo was consistent with Xperi’s independent strategy to separate its product licensing and IP licensing businesses. To facilitate Xperi board’s evaluation of the proposed business combination transaction in comparison to Xperi’s stand-alone business plans and related valuation, the Xperi board instructed management to prepare an alternative financial forecast scenario for Xperi that reflected management’s view of the prospects for Xperi’s IP licensing business assuming minimal investment by Xperi in its IP licensing business to support the monetization of its existing IP portfolio and no new investments to expand the IP portfolio and disposals of certain of Xperi’s IP assets. This alternative scenario was being actively considered by Xperi’s management and the Xperi board following the failure of the sales process as a means to maximize stockholder value and the Xperi board believed that it was important to compare any potential transaction to such case. The Xperi board

 

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also instructed Xperi’s management to evaluate TiVo’s financial forecasts and consider adjustments that Xperi management believed to be appropriate. At the end of the meeting, Xperi’s directors unanimously authorized Xperi’s management and Centerview to continue working on an analysis of an all-stock merger of equals transaction in conjunction with TiVo and its advisors, but not propose any specific transaction terms at this time.

On October 30, 2019, representatives of LionTree provided an initial briefing to TiVo’s strategic committee on a potential business combination transaction with Xperi, including a review of certain preliminary valuation analyses. TiVo management also shared with the strategic committee initial perspectives on fit and synergies.

On November 4, 2019, the Xperi board met by telephone to discuss the status of discussions with TiVo. Representatives of Centerview and Skadden attended. Messrs. Kirchner and Pernin reported that Xperi’s management continued to work with Centerview to evaluate an all-stock merger of equals transaction that would enable Xperi and TiVo to combine their respective IP licensing and product businesses and thereafter split the combined IP licensing businesses and product businesses into two separate companies. Messrs. Kirchner and Pernin also described the status of discussions and information exchanges with TiVo regarding the proposed transaction, noting that both parties continued to evaluate the merits of the transaction from a strategic and financial point of view, but neither party had made any final determinations regarding the transaction or specific proposals on transaction terms. As previously discussed with the Xperi board, management reviewed the alternative financial forecast scenario for Xperi as well as a risk-adjusted case for TiVo as requested by the Xperi board in their prior meeting. After discussion of the financial forecasts, representatives from Centerview presented a preliminary pro forma financial analysis of the transaction based on the various financial forecasts, consistent with the preliminary pro forma financial analysis previously presented to the Xperi board at its meeting on October 29, 2019. After discussion, the Xperi board, Xperi’s management and Centerview discussed next steps. A representative from Centerview noted that TiVo had a board meeting on November 6, 2019 and intended to issue earnings on November 7, 2019 while Xperi was issuing earnings on November 6, 2019. After discussion, the Xperi board unanimously authorized Xperi’s management and Centerview to continue working on an analysis of an all-stock merger of equals transaction in conjunction with TiVo and its advisors assuming that such transaction would not imply a premium to TiVo of more than 20%, but not to propose any specific transaction terms at this time.

On November 5, 2019, Mr. Kirchner communicated to Mr. Shull and Centerview informed representatives of LionTree that Xperi was authorized to continue evaluating a potential all-stock merger of equals transaction and provided verbal guidance that Xperi would be prepared to consider a transaction that implied a premium to TiVo’s then-current share price based on the prevailing trading prices of Xperi and TiVo at such time of up to approximately 20% in order to move forward.

On November 6, 2019, representatives of LionTree had a detailed discussion with the TiVo board regarding its preliminary valuation analyses on Xperi, TiVo and a potential combined company, certain transaction considerations and the status of financial due diligence. After such discussions, TiVo board resolved that TiVo should continue its due diligence of Xperi in order to properly evaluate a proposal, if received. As part of these discussions, the TiVo board continued its evaluation of other strategic transactions, including an indication of interest in the potential sale of the TiVo product business as a separate transaction and the risks to TiVo and its stockholders associated with such offer.

Following the November 6, 2019 meeting, the strategic committee of the TiVo board instructed representatives of LionTree to communicate to Centerview that TiVo was prepared to consider a transaction that would result in TiVo stockholders owning 55-57.5% fully diluted ownership of the combined company, which was subsequently communicated by representatives of LionTree to Centerview. Further, LionTree requested to Centerview that, should Xperi decide to pursue a transaction on that basis, Xperi should submit a formal proposal to TiVo so that it would be in a position to evaluate it relative to its current plan to independently separate its product and IP businesses. At the time, representatives of LionTree also indicated, at the direction of the TiVo board, that TiVo would need to engage third-party experts and complete additional due diligence on Xperi before

 

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it could evaluate any proposal from Xperi. Diligence discussions between the parties continued in the first half of November, with considerable efforts focused on the associated value drivers for the transaction, and Xperi and TiVo’s management’s collective identification and validation of potential cost and revenue synergies.

On November 11, 2019, Mr. Kirchner and Mr. Shull, along with TiVo board members Raghavendra Rau and Glenn Welling, met for dinner in Costa Mesa, California. The dinner afforded the TiVo board members an opportunity to discuss with Mr. Kirchner his views of, and Xperi’s rationale for, the potential business combination between the two companies, his vision for the combined company and his leadership abilities and style.

On November 18, 2019, the Xperi board met by telephone to discuss the status of discussions with TiVo. Representatives of Centerview and Skadden attended. Mr. Kirchner updated the Xperi board on Xperi’s ongoing discussions with TiVo regarding a potential all-stock transaction and noted significant progress on mutual due diligence had been made since the last update to the Xperi board, allowing for a more refined pro forma financial analysis of the combined company. Mr. Kirchner observed that both companies continued to evaluate the merits of an all-stock transaction from a strategic and financial point of view, but neither party had made any specific proposals on transaction terms. Mr. Kirchner further noted that TiVo’s management and the TiVo board intended to make a decision on whether to independently split its product and IP licensing businesses in the near future and therefore it was important for the Xperi board to provide clear direction to Xperi’s management and Centerview on how to proceed with respect to the proposed transaction. Representatives from Centerview then presented a financial analysis of the potential all-stock transaction, including a comparison of each company’s trading statistics and multiples, Xperi management’s projections of each company’s future financial results, estimated synergy opportunities from the transaction, a pro forma view of the financial aspects of the business combination (including a preliminary contribution analysis for the combined business) and a pro forma view of the future financial prospects of the combined company (with and without synergies). Following this presentation and discussion on the valuations, representatives from Centerview presented an analysis of exchange ratios and implied ownership sensitivities for a business combination of the two companies. The Xperi board considered the likelihood of the scenarios previously discussed and evaluated the implications of various exchange ratios on Xperi’s stockholders, stock price, transaction premium, relative valuation and transaction structure. Representatives of Skadden provided the Xperi board with an overview of their fiduciary duties under Delaware law. After the discussion, the Xperi board reached a consensus view that it required further information in order to further evaluate the proposed all-stock transaction and to decide whether, and on what terms, to make a proposal to TiVo on specific transaction structure and terms. In particular, the Xperi board wanted Xperi’s management and Centerview to do additional work relating to the combined company’s product business strategy and financial forecasts. The Xperi board instructed Xperi’s management and Centerview to provide further information and analysis on the combined company’s product business and to reconvene as soon as practicable with all members of the Xperi board present to further consider the potential all-stock transaction.

On November 19, 2019, the Xperi board reconvened by telephone to discuss whether, and on what terms, to make a proposal to TiVo regarding specific transaction terms for a potential all-stock merger of equals transaction. Representatives of Centerview and Skadden attended. Mr. Kirchner then outlined and highlighted various aspects of the strategic rationale for the business combination transaction with particular focus on the ways in which the business combination would position the combined company’s product business to capitalize on convergence in the media and technology industries, to migrate from a device-centric business to a consumer-centric subscription business and to harvest revenue synergies by cross-selling a wider spectrum of products to their broad roster of partners and customers. In this regard, Mr. Kirchner described the competitive advantages of TiVo’s products and highlighted the manner in which the combined company could enhance the value of those products in the marketplace when combined with Xperi’s own product offerings. Mr. Kirchner also noted that the business combination would enable the combined company’s IP licensing business to generate more stable returns through greater scale and investment. Finally, Mr. Kirchner noted that the potential all-stock transaction provided a more compelling path for the structural separation of the combined company’s product and IP licensing businesses than either company could achieve on their own. Representatives from Centerview then

 

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presented a summary of Centerview’s financial analysis of the transaction, with a particular focus and additional detail on TiVo’s product business, the combined company’s product business, as well as valuation implications of combining the two company’s product businesses. Representatives from Centerview also provided additional analysis and detail on TiVo’s IP licensing business and the combined company’s IP licensing business, as well as valuation implications of combining the two company’s IP licensing businesses. Directors asked questions regarding Centerview’s analysis and a discussion ensued. The Xperi board discussed the fact that the strategic and financial underpinnings of the proposed business combination transaction depended, in part, on the combined company’s ability to harvest synergies through the combination and much of the value upside for Xperi’s stockholders depended, in part, on the successful execution of the plan presented by Xperi’s management. The Xperi board discussed the fact that the management of the combined company would be an important factor in the Xperi board’s comfort with the potential all-stock transaction. Discussion ensued and the Board reached consensus that the potential all-stock transaction should contemplate that Xperi’s senior management would run the combined company. Following the discussion, the Xperi board authorized Xperi’s management and Centerview to negotiate with TiVo a potential exchange ratio for an all-stock merger transaction with TiVo that would result in Xperi’s stockholders owning not less than 46% of the pro forma equity ownership of the combined company. The Xperi board also instructed management to confirm with TiVo that Xperi’s directors would comprise a majority of the combined company’s board of directors and that the combined senior management would primarily be from Xperi.

Later on November 19, 2019, Mr. Kirchner called Mr. Shull and proposed an all-stock merger-of-equals transaction with TiVo at an exchange ratio of 0.430 shares of the combined company stock for each TiVo share, which would result in TiVo stockholders owning approximately 52.5% of the combined company and Xperi stockholders owning approximately 47.5% of the combined company at the closing of the transaction. Xperi subsequently presented TiVo with a letter of intent reflecting such terms. As part of this letter of intent, Xperi requested a three-week exclusivity period in which to conduct detailed mutual due diligence review and negotiate transaction documents. Details on the management and governance of the combined company was not included in the letter of intent.

On November 20, 2019, representatives of LionTree provided an initial review of the Xperi letter of intent to the TiVo board’s strategic committee, including a review of preliminary valuation analyses. On November 22, 2019 the TiVo board held a meeting to review the offer from Xperi, during which representatives of LionTree discussed its updated preliminary valuation and combination analysis. The TiVo board considered the initial due diligence review perspectives from TiVo management, the terms of the offer and key components thereof. Following such consideration and discussion among the TiVo board members, the TiVo board provided perspectives with respect to a counterproposal at an exchange ratio of 0.480. Following such discussion, the TiVo board instructed TiVo’s Chief Executive Officer, David Shull, and representatives of LionTree to communicate a counterproposal to representatives of Xperi on terms within certain parameters authorized by the TiVo board and that are reviewed and approved by strategic committee and, if Xperi agrees to proceed on terms within such authorized financial parameters, proceed into a three-week period of exclusive discussions with Xperi. At the direction of the TiVo board, representatives of LionTree communicated TiVo’s counteroffer to Centerview following the board meeting. Mr. Shull subsequently communicated these terms and the rationale behind TiVo’s counteroffer to Xperi’s Chief Executive Officer, Jon Kirchner, via telephone conference call.

After consulting with Centerview, on November 24, 2019 Mr. Kirchner responded to TiVo’s counter-proposal by indicating to Mr. Shull that Xperi would be prepared to improve the exchange ratio for transaction to 0.450 combined company shares for share of TiVo common stock, conditioned upon entering into exclusivity as previously proposed.

On November 25, 2019, Mr. Shull called Mr. Kirchner to propose a revised exchange ratio of 0.470, but indicated that TiVo could potentially support a transaction at an exchange ratio of 0.460.

Following receipt of TiVo’s revised proposal, Mr. Kirchner updated the Xperi board on the negotiations. Mr. Kirchner recommended that the Xperi board authorize him to propose an exchange ratio of 0.455 as a “best

 

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and final” offer, implying that each TiVo stockholder would receive 0.455 shares in the combined company for each share of TiVo common stock held by it and that Xperi stockholders would retain 46.5% of the pro forma equity ownership of the combined company. Mr. Kirchner noted that this pro forma equity ownership of the combined company was within the range authorized by the Xperi board on November 19. The Xperi board authorized Mr. Kirchner to propose an exchange ratio of 0.455. Mr. Kirchner communicated this revised offer to Mr. Shull, who, based on authority of the Board, subsequently accepted on behalf of TiVo. Mr. Kirchner subsequently updated the Xperi board that the revised offer had been accepted. An exclusivity agreement was signed by TiVo and Xperi shortly thereafter.

On November 26, 2019, representatives of TiVo, Xperi, LionTree and Centerview held a telephone meeting to discuss the confirmatory due diligence process between the parties. Later that day, the Xperi board requested that Mr. Shull attend the next regularly scheduled meeting of the Xperi board to provide additional information on the TiVo business.

On November 27, 2019, Skadden sent Cooley a draft merger agreement for the proposed transaction, followed by a phone call between representatives of Skadden and Cooley to provide background and context on key issues in the merger agreement. The proposed merger agreement was structured as a merger of equals with a common parent structure and mutual representations, warranties, covenants and other obligations throughout.

Over the course of the first two weeks of December 2019, various representatives of TiVo, LionTree, Cooley, KPMG LLP, which we refer to as KPMG, and Tivo’s tax advisor on the one hand, and Xperi, Centerview and Skadden on the other hand, held in person and telephone meetings to continue their respective due diligence, including finance and tax due diligence, HR due diligence, IP due diligence, business and technology due diligence, and general legal due diligence and also commenced workstreams related to obtaining debt financing for the combined company required to consummate the transaction.

On December 3, 2019, the Xperi board held a regularly scheduled meeting. Representatives of Centerview and Skadden attended. Mr. Shull was invited to present an overview of TiVo to the Xperi board. Mr. Shull presented an overview of the TiVo business. The Xperi board asked Mr. Shull about the growth trends of certain business lines and how TiVo planned to address industry market trends, like streaming. Mr. Shull then discussed TiVo’s product company vision and opportunities, including for search and discovery of streaming content, content and ad monetization, pay TV and broadband, and smart TVs. The Xperi board discussed with Mr. Shull how TiVo worked with various content providers and how Xperi’s ecosystems and technology could potentially accelerate TiVo’s growth opportunities. Mr. Shull then provided an overview of the TiVo Stream 4K, a new product TiVo planned to launch at CES. Mr. Shull discussed in particular the content available on the TiVo Stream, including TiVo’s upcoming partnership with SlingTV. He then discussed TiVo’s hybrid radio product and its potential integration with Xperi’s automotive business. Mr. Shull reviewed with the Xperi board potential synergies with Xperi’s businesses. The Xperi board discussed with Xperi’s management the presentation from Mr. Shull and the strategic rationale of the proposed all-stock transaction. Mr. Shull left the meeting and the Board meeting continued with representatives of Skadden and Centerview. Mr. Kirchner then provided an update on the negotiations and due diligence. Mr. Andersen then provided an update on the commitment papers to refinance the combined debt of Xperi and TiVo.

Later that day, Mr. Kirchner and Mr. Shull met to discuss various transaction matters, including the financing for the combined company, governance matters such as board composition and officer designations, naming of the combined company and employee equity plans. Mr. Shull communicated that the TiVo board had instructed him to discuss the TiVo board’s desire for existing TiVo management to hold certain key management positions in the combined company and for existing TiVo directors to comprise a majority of the combined company’s board of directors. Mr. Kirchner explained that the management of the combined company was an important factor in the Xperi board’s comfort with the transaction and that the Xperi board would prefer Xperi’s senior management to run the combined company and for Xperi’s directors to comprise a majority of the combined company’s board of directors. Mr. Kirchner and Mr. Shull discussed potential alternative management

 

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structures, including a joint leadership structure. That evening, Mr. Kirchner and Mr. Shull had dinner and continued to discuss the governance and management of the combined company.

On December 4, 2019, Mr. Kirchner updated Mr. Hill on his discussion with Mr. Shull on the governance and management of the combined company. Mr. Hill instructed Mr. Kirchner to discuss this matter with each of the members of the Xperi board and to provide Mr. Hill with an update on their views.

On December 5, 2019, Mr. Shull communicated to Mr. Kirchner by telephone conference call that the TiVo board had discussed Xperi’s proposals for the governance and management of the combined company and agreed with all of the proposals other than Mr. Kirchner being the Chief Executive Officer of the combined company. Mr. Shull noted that Jim Meyer, the Chairman of the TiVo board, would call Rick Hill, the Chairman of the Xperi board, to discuss the officer designations.

Later that day, Mr. Kirchner updated each member of the Xperi board to understand their current thinking on proposed governance and management of the combined company. The Xperi board reiterated their preference that Mr. Kirchner and the current senior management of Xperi run the combined company. The Xperi board believed that having a shared leadership model with Mr. Kirchner as Executive Chairman and Mr. Shull as Chief Executive Officer or vice-versa was sub-optimal and would create internal confusion. Mr. Kirchner provided an update of his discussions with the Xperi board to Mr. Hill by email and Mr. Hill asked Mr. Kirchner to communicate the Xperi board’s position to Mr. Shull. Later that day, Mr. Kirchner called Mr. Shull to reiterate that the Xperi board felt it was important that Xperi management should hold key management positions in the combined company, including the Chief Executive Officer.

On December 6, 2019, Cooley delivered a revised draft of the merger agreement, with feedback from TiVo’s management to Skadden. The revised draft contained TiVo’s proposal on certain key legal issues, including termination fees, closing conditions, “no-shop” provisions and representations and warranties. Certain issues such as corporate governance of HoldCo, treatment of equity awards and financing related provisions were identified as requiring further due diligence and discussion among the business principals.

On December 7, 2019, Mr. Hill discussed the management and governance of the combined company with Mr. Meyer by telephone. Mr. Meyer explained that the TiVo board would prefer that existing members of TiVo management hold key management positions in the combined company and that existing TiVo directors comprise a majority of the combined company’s board of directors. Mr. Hill and Mr. Meyer agreed that each would instruct Mr. Kirchner and Mr. Shull to discuss and seek to agree to a compromise position on management and governance issues.

On December 7, 2019, representatives of Xperi and Skadden discussed the revised draft of the merger agreement provided by Cooley on December 6, including the treatment of equity awards, deletions of certain closing conditions and changes to the financing cooperation covenant, among other legal issues.

On December 9, 2019, Mr. Kirchner and Mr. Shull discussed the management and governance of the combined company by telephone. Mr. Kirchner and Mr. Shull agreed to present a structure under which Mr. Kirchner would be the Executive Chairman of the combined company’s board of directors for a term of two years, after which time Mr. Kirchner would become a director. Mr. Shull would be the Chief Executive Officer of the combined company. The board of the combined company would be seven members comprised of Mr. Kirchner, Mr. Shull, three independent directors appointed by Xperi and two independent directors appointed by TiVo. Later that day, Mr. Kirchner communicated the proposal to Mr. Hill who said he would need to discuss this in detail with the Xperi board.

Later in the day on December 9, 2019, the TiVo board met and Mr. Meyer reviewed a discussion he had with Mr. Hill regarding the potential structure of the combined company board of directors, and the potential Chief Executive Officer of the combined company. The TiVo board agreed on a response to Xperi regarding the

 

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issues raised, and alternatives to the extent that the response was unacceptable to Xperi, noting that these issues should not preclude reaching agreement on an otherwise viable transaction.

On December 10, 2019, representatives of TiVo participated in a telephone conference call with representatives of RBC Capital Markets, which we refer to as RBC, and one other potential financing source to facilitate their due diligence on TiVo as potential financing sources for the combined company. Over the course of the remainder of that week, representatives of TiVo held conference calls with Bank of America Merrill Lynch and additional calls with RBC regarding TiVo’s financial and business projections. Each of RBC, Bank of America Merrill Lynch and one other potential financing source committed to provide feedback by December 12 on the key terms at which they would be willing to provide a financing commitment to finance the combined company.

On December 10, 2019, Skadden sent a revised draft of the merger agreement to Cooley and offered to discuss any open issues around treatment of equity awards and certain tax related provisions on a telephone call.

On December 11, 2019, representatives of TiVo and Cooley met at Cooley’s offices in Palo Alto to discuss open issues on the merger agreement and coordinate due diligence efforts.

On December 11, 2019, Mr. Shull called Mr. Kirchner to suggest that Mr. Kirchner should meet with Eddy Hartenstein, a director of TiVo, the following day to discuss the proposed transaction and the combined company.

On December 12, 2019, Mr. Kirchner met with Mr. Hartenstein in Los Angeles, California. Mr. Hartenstein asked for an update on Xperi’s business and the potential of Xperi’s new product. Mr. Hartenstein noted that the TiVo board favored a joint leadership structure for the combined company and that the exchange ratio for the proposed all-stock merger suggested that TiVo should appoint four members of the board of the combined company and Xperi should appoint three members of the combined company. Mr. Kirchner noted to Mr. Hartenstein that he believed the management and governance of the combined company was an important factor in the Xperi board’s comfort with the proposed transaction, but that this was a matter for the Xperi board to discuss.

On December 12, 2019, representatives of TiVo and KPMG held a telephone conference call to discuss the status and findings of KPMG’s financial due diligence of Xperi on behalf of TiVo.

On December 12, 2019, representatives of TiVo, LionTree, Xperi and Centerview held a follow-up diligence call to review Xperi’s additional product customer diligence questions.

On December 12, 2019, Cooley sent a revised draft of the merger agreement to Skadden.

On December 13, 2019, Mr. Shull called Mr. Kirchner to discuss the governance and management of the combined company, the status of negotiations of the merger agreement and financing for the combined company.

Later that day, the Xperi board met via telephone conference to discuss the status of discussions with TiVo. Representatives of Centerview and Skadden attended. Mr. Kirchner reminded the Xperi board that the parties had tentatively agreed on a TiVo exchange ratio (based on each company’s current equity capital structure) and the pro forma ownership split of the combined company, but had not yet agreed on governance of the combined company. Mr. Hill described his ongoing discussions regarding the size and composition of the combined company’s board of directors, the chairman of the combined company’s board of directors and the leadership of the combined company’s senior management team. Mr. Hill noted that TiVo was seeking greater representation on the combined company’s board and had recently expressed interest in a leadership structure in which Mr. Shull would become the Chief Executive Officer of the combined company. The Xperi board then discussed its previously expressed consensus view that the strategic and financial underpinnings of the transaction

 

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depended, in part, on the combined company’s ability to harvest synergies through the combination and much of the value upside for the Xperi stockholders depended, in part, on the successful execution of the plan presented by management. The Xperi board discussed the fact that retaining management of the combined company, through board composition and management control, were important factors in the Xperi board’s comfort with the transaction. Mr. Hill indicated that he would continue discussions with TiVo on these matters and report back to the Xperi board.

On December 13, 2019, representatives of TiVo, LionTree, Xperi and Centerview held an overall check-in call to discuss the status of due diligence on both sides and to review open items and next steps. Representatives of TiVo, LionTree, Xperi and Centerview also held a follow-up IP diligence call to review the status of Xperi’s IP licensing customer negotiations and ongoing litigation.

On December 13, 2019, representatives of Cooley and Skadden engaged in discussions regarding open issues in the proposed merger agreement, including various closing conditions and deal protection issues. Following the discussion, Cooley and Skadden agreed to relay the respective positions of the other side to their respective clients.

On December 14, 2019, Mr. Hill called Mr. Meyer to discuss the governance and management of the combined company. Mr. Hill explained that the Xperi board’s decision was conditioned on Xperi’s senior management running the combined company and for Xperi’s directors to comprise a majority of the combined company’s board of directors. Mr. Hill suggested that the board of the combined company should comprise three independent directors from each of Xperi and TiVo with the independent directors selecting the chairman of the board, and Mr. Kirchner, as the Chief Executive Officer of the combined company, filling the seventh board seat. Mr. Meyer agreed to discuss this proposal with the TiVo board.

In the morning on December 14, 2019, the strategic committee of the TiVo board held a telephone conference call, with representatives of Cooley and LionTree, to discuss the status of the overall transaction, including the status of due diligence, financing and merger agreement negotiations. Included in the review was a discussion of open issues related to deal protection terms, conditions to closing, and governance structure of the post-combination parent company.

In the afternoon on December 14, 2019, Cooley and the strategic committee updated the full TiVo board by telephone on the status of the transaction. Mr. Shull provided an update on the status of discussions with the banks on the debt financing commitments. The TiVo board also discussed at length the corporate governance structure of the combined entity post-closing, including who would occupy the role of Chief Executive Officer and the composition of the combined board. Cooley also advised on the status of merger agreement negotiations, including open issues relating to closing conditionality. The TiVo board discussed various considerations, including deal structure, ownership of the combined company (which would have implied a premium to their then-current share price based on the prevailing trading prices of Xperi and TiVo at such time) and overall value to TiVo stockholders in context of the open items involving corporate governance and deal certainty. The TiVo board agreed to continue discussions with Xperi and signal broad acceptance of the corporate governance structure proposed by Xperi, but that TiVo did not agree to the closing conditions proposed by Xperi. Members of the TiVo management then left the meeting and a discussion ensued regarding various compensation and executive retention matters associated with the proposed transaction, including the treatment of the transaction as a “Change of Control” for purposes of various equity and severance arrangements. Following the discussion, no action was taken pending review of the matters by the compensation committee of the TiVo board.

On December 15, 2019, the Xperi board held a special meeting to review the terms of the proposed mergers. Representatives of Centerview and Skadden attended. Mr. Hill described his recent discussions with TiVo’s representatives regarding the governance of the combined company. Mr. Hill informed the Xperi board that TiVo had agreed to a seven member board comprised of three directors from each company and the Chief Executive Officer of the combined company. Mr. Hill noted that specific directors had not been identified or discussed.

 

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Mr. Hill further noted that TiVo had agreed that Mr. Kirchner would be the Chief Executive Officer of the combined company and Xperi’s senior management would lead the combined company. Mr. Anderson then outlined the terms of a debt refinancing on which the management team had been working to replace the credit facilities of Xperi and TiVo in connection with the transaction. Mr. Anderson noted that Xperi was working to obtain a commitment letter from lenders concurrently with the proposed execution of a merger agreement for the transaction. Mr. Anderson then presented a financial analysis of the proposed all-stock transaction based on the latest financial forecasts for Xperi and TiVo, synergy estimates for the transaction and current market statistics. The presentation included, among other things, a pro forma view of the financial aspects of the business combination (including a preliminary contribution analysis for the combined business) and a pro forma view of the future financial prospects of the combined company (with and without synergies). The Xperi board then asked a number of questions to Mr. Anderson and Centerview related to the presentation and the financial analysis. Representatives from Skadden then described the status of negotiations of the proposed merger agreement, including material issues that remained under discussion.

On December 15, 2019, Mr. Kirchner called Mr. Shull to discuss the TiVo board’s feedback on Xperi’s proposals for the governance and management of the combined company. Mr. Shull noted that the TiVo board had agreed to accept Xperi’s proposals. Mr. Kirchner and Mr. Shull also discussed the status of negotiations of the merger agreement and the financing for the combined company and agreed to schedule an all-hands call with Xperi and TiVo and each of their respective advisors to discuss steps to close the transaction later that day.

Later that day, representatives of TiVo, Xperi, LionTree, Centerview, Cooley and Skadden held a due diligence check-in telephone conference call to discuss the status of due diligence between the parties and the timeline to signing. Representatives of Cooley and Skadden also had a follow-up call to discuss bring-down due diligence matters later that evening.

On December 16, 2019, representatives of TiVo, Xperi, LionTree, Centerview, Cooley and Skadden held a telephone conference call to discuss the status of due diligence and the status of the financing commitments. Later that morning, TiVo director Mr. Moloney had a call with Mr. Kirchner to discuss Mr. Kirchner’s vision for the combined company. In the afternoon on December 16, the TiVo board held a meeting, with representatives of TiVo management, LionTree and Cooley in attendance. Representatives of Cooley provided an update on the current status and resolution of transaction issues previously open and under board discussion, including those related to the certainty of transaction completion. TiVo management provided an update on the negotiations and status of the merger agreement and financing commitments. Questions were asked, and a full discussion ensued, including a discussion of remaining open issues and process, as well as consideration of TiVo remaining an independent standalone company and other potential strategic alternatives that may be reasonably available to it. Representatives of LionTree then reviewed certain preliminary financial analyses undertaken by LionTree related to the proposed transactions. After the board meeting, TiVo director Ms. Yeadon had a call with Mr. Kirchner to discuss Mr. Kirchner’s vision for the combined company. Later that evening on December 16, Skadden sent a revised draft of the merger agreement reflecting further discussion amongst principals on key issues regarding closing conditions and corporate governance.

On December 17, 2019, Cooley held further discussions with TiVo on the latest draft merger agreement and the remaining issues relating to closing conditionality. Additionally, TiVo director Ms. Durr had a call with Mr. Kirchner to discuss his background and experience, and vision for the combined company.

Later that day, the Xperi board held a special meeting to review the terms of the proposed mergers. Representatives of Centerview and Skadden attended. Representatives of Skadden presented a detailed outline of the draft merger agreement based on a summary outline and a copy of the proposed merger agreement (copies of which had been delivered to the Xperi board in advance of the meeting) and any open issues. Mr. Anderson then outlined the final terms of a debt refinancing on which the management team had been working to replace the credit facilities of Xperi and TiVo in connection with the proposed all-stock “merger of equals transaction”. Mr. Anderson noted that Xperi had received a commitment letter from lenders reflecting the outlined terms.

 

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Following discussion, the Xperi board agreed to remove the financing condition from the merger agreement due to the fact that Xperi had received commitment papers. Representatives of Centerview reviewed with the Xperi board Centerview’s financial analysis of the mergers, and rendered to the Xperi board an oral opinion, which was subsequently confirmed by delivery of a written opinion dated December 18, 2019 that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken in preparing its opinion, the Xperi exchange ratio provided for pursuant to the merger agreement was fair, from a financial point of view, to holders of shares of Xperi common stock (other than Xperi Excluded Shares). For a detailed discussion of Centerview’s opinion, please see below under the caption “—Recommendation of the Xperi Board of Directors—Opinion of Xperi’s Financial Advisor.” Following discussion by the Xperi board, the Xperi board determined that entering into the merger agreement and consummating the transaction contemplated thereby, including the Xperi merger, was advisable and fair to and in the best interests of Xperi and its stockholders, authorized and approved the execution, delivery and performance of the merger agreement by Xperi and approved the Xperi merger and recommended the adoption of the merger agreement by the Xperi stockholders and directed that the merger agreement be submitted for consideration by the Xperi stockholders at the Xperi special meeting. On a motion duly made and seconded, the Xperi board approved the resolutions by unanimous vote of those directors in attendance.

Later that afternoon representatives of Skadden communicated to Cooley on a telephone call that Xperi had agreed to remove certain closing conditions under discussion and Cooley and Skadden discussed and resolved remaining issues surrounding corporate governance. Following that telephone call, Cooley sent a revised draft of the merger agreement to Skadden reflecting that discussion.

On December 18, 2019, Mr. Shull called Mr. Kirchner to request that TiVo would like the flexibility to appoint one director to the board of the combined company who does not qualify as independent under Nasdaq rules. Mr. Kirchner agreed to discuss this with the Xperi board. Later that day, following discussions with the Xperi board, Mr. Kirchner confirmed that the Xperi board would accept TiVo’s proposal. Later that day, Mr. Shull sent a message to Mr. Kirchner confirming that subject only to finalizing the disclosure schedules and various communication documents, TiVo was ready to proceed with execution of the merger agreement.

On December 18, 2019, the TiVo board held a meeting, with representatives of LionTree and Cooley in attendance. Mr. Shull provided an update on the status of due diligence pertaining to a potential strategic transaction with Xperi, including the proposed resolution of the issues discussed with the TiVo board on December 14 with respect to corporate governance and deal certainty. Questions were asked, and a full discussion ensued, including a discussion of remaining open issues and process, as well as consideration of remaining an independent stand-alone company. The TiVo board discussed the corporate governance structure of the combined company and a discussion ensued regarding various compensation and executive retention matters associated with the proposed transaction. The compensation committee of TiVo’s board recommended, and the board approved, the treatment of the transaction as a “Change of Control” for purposes of various equity and severance arrangements and elimination of salary clawback provisions from the TiVo Executive Severance and Arbitration Agreements in order to retain executives during the pendency of the transaction. Representatives of LionTree then discussed and reviewed its final financial analyses undertaken by LionTree related to the proposed transactions. Representatives of LionTree also rendered LionTree’s oral opinion, subsequently confirmed in writing by delivery of LionTree’s written opinion dated December 18, 2019, to the TiVo board, as to the fairness, from a financial point of view, as of such date, of the TiVo exchange ratio to the holders of TiVo’s common stock (for purposes of such opinion and this summary, other than Xperi and its affiliates), based upon and subject to the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by LionTree in preparing its opinion. The LionTree opinion is more fully described under the section “—Recommendation of the TiVo Board of Directors—Opinion of TiVo’s Financial Advisor” beginning on page 84. A representative of Cooley then reviewed the TiVo board’s fiduciary duties in connection with its review of the transaction, reviewed interests of certain directors in the transaction, described the material terms of the proposed merger agreement between TiVo and Xperi, reported on any changes to terms previously discussed, and reviewed with TiVo management a proposal that TiVo adopt a Section 382 rights plan in connection with the

 

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transaction to preserve TiVo’s net operating losses. Following extensive discussion of all of the foregoing by the TiVo board, the TiVo board approved the Section 382 rights plan, and approved the merger agreement and the consummation of the proposed merger upon the terms and subject to the conditions set forth in the merger agreement, determined that the terms of the merger agreement, the TiVo merger and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, TiVo and its stockholders, directed that the merger agreement be submitted to the stockholders of TiVo for adoption, recommended that TiVo’s stockholders adopt the merger agreement and declared that the merger agreement is advisable. The reasons that supported the TiVo board’s decision to enter into the merger agreement and consummate the TiVo merger, and a variety of risks and other countervailing factors that the TiVo board considered, are summarized in the section titled “—Recommendation of the TiVo Board of Directors—TiVo’s Reasons for the Mergers” beginning on page 82.

Later on December 18, 2019, Skadden and Cooley finalized their due diligence investigations and related disclosure letters. Each of TiVo, Xperi, HoldCo and the Merger Subs executed and delivered the merger agreement, effective as of December 18, 2019. On the morning of December 19, 2019, prior to the open of markets, TiVo and Xperi publicly announced the transaction via press release and a subsequent joint conference call including, among others, Mr. Shull and Mr. Kirchner.

Recommendation of the Xperi Board of Directors

At its meeting on December 17, 2019, the Xperi board adopted the merger agreement and determined that the merger agreement and the transactions contemplated thereby, including the mergers, are advisable, fair to and in the best interests of Xperi and its stockholders. The Xperi board recommends that the Xperi stockholders vote “FOR” each of the Xperi merger proposal, the Xperi adjournment proposal and the Xperi compensation proposal.

In evaluating the merger agreement, the Xperi board consulted with and received the advice of Xperi’s senior management and its legal and financial advisor. In reaching its decision, the Xperi board considered a number of factors, including, but not limited to, the following factors which the Xperi board viewed as generally supporting its decision to adopt and enter into the merger agreement and its recommendation that Xperi stockholders vote “FOR” each of the Xperi merger proposal, the Xperi adjournment proposal and the Xperi compensation proposal.

Xperi’s Reasons for the Mergers

Strategic Considerations. The Xperi board considered that the mergers will likely provide a number of significant strategic opportunities, including the following:

 

   

Scale in Complementary Businesses. The mergers will combine two industry-leading platforms to create a leader in consumer & entertainment technology and IP licensing. Xperi and TiVo share complementary products and services, end markets, research and development capabilities and innovation-driven cultures. Additionally, both companies also operate with two principal businesses – product and IP licensing. The mergers will enable these respective businesses to be stronger and better positioned to drive growth and profitability than either on its own;

 

   

The combined product businesses will create a leading consumer and entertainment technology business, better positioned to deliver on growth fueled by the proliferation of streaming content and evolving consumer video and audio entertainment trends in the home, automobile and mobile markets. Together, these businesses reach hundreds of millions of consumers across several markets with leading ecosystem partners and will achieve greater scale and help transform Xperi’s ability to serve these customers with unique and innovative products and services;

 

   

The combined IP licensing businesses will represent one of the industry’s largest intellectual property licensing platforms with a diverse portfolio of entertainment and semiconductor

 

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intellectual property and enhanced scale, growth strategies, differentiated technologies, and a diversified revenue mix across segments reducing volatility, geographies and clients, resulting in improved opportunities for growth, cost savings and innovation relative to what Xperi could achieve on a standalone basis;

 

   

Synergies. The combined company is expected to generate annual run-rate cost synergies of $50 million by year-end 2021. Xperi expects to realize these savings on an ongoing basis across numerous functional areas, including administrative, sales and marketing and engineering. Additionally, Xperi has estimated $125 million in potential incremental annual revenue as a result of growth synergies within five (5) years. These growth synergies, in part, are through cross-selling each of Xperi and TiVo’s products and services to the other party’s existing customers, in particular in the home and automotive sectors. The combination of these cost and revenue synergies is expected to result in the combined company having greater potential to achieve further earnings growth and generate more substantial cash flow than either Xperi or TiVo could on a standalone basis;

 

   

Strong Financial Position. The combined company will have far greater scale and financial resources. The improved financial profile of the combined company will offer more diversification of revenue as well as attractive recurring cash flows. Xperi and TiVo expect that this stronger financial position will improve the combined company’s ability to support product development strategies more than either Xperi or TiVo could on a standalone basis: to respond more quickly to customer needs, technological change, increased competition and shifting market demand; and to pursue strategic growth opportunities in the future, including acquisitions;

 

   

Strategic Flexibility. The increased scale and enhanced financial position of the combined company will provide more flexibility to pursue various strategic initiatives. These may include organic investments, partnerships, joint ventures, strategic acquisitions and divestitures. Additionally, although there is no current plan or intention to separate any parts of the combined company, the increased scale of each of the product and IP licensing businesses would better position these businesses as potential independent public companies in a future separation;

 

   

Customer Benefits. The combined company will improve Xperi and TiVo’s existing ability to expand current customer relationships. Xperi believes that the combination of the two companies’ product and service lines and research and development resources should enable the combined company to meet customer needs more effectively and to deliver more complete and unique products, services and solutions to Xperi and TiVo’s customers. In addition, Xperi believes the larger sales organization, greater marketing resources and financial strength of the combined company coupled with a complementary customer base may lead to improved opportunities for marketing the combined company’s products and services; and

 

   

Employee Opportunities. The mergers will allow for employees to benefit from more broad-ranging opportunities as part of a larger, better capitalized, consumer entertainment technology and IP licensing business. On a combined basis, the greater depth and breadth of technical and business talent provides a stronger platform for innovation and growth. Additionally, it will improve Xperi’s ability to attract and retain the key talent that is required to deliver on the growth opportunities of the combined company.

Other Factors Considered by the Xperi Board. In addition to considering the strategic factors described above, the Xperi board considered the following additional factors, all of which it viewed as supporting its decision to approve the merger agreement:

 

   

the fact that the merger agreement provides for a fixed exchange ratio and that no adjustment will be made in the merger consideration to be received by either Xperi’s or TiVo’s stockholders in the mergers as a result of possible increases or decreases in the trading price of the Xperi and/or TiVo common stock following the announcement of the mergers;

 

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its knowledge of Xperi’s business, operations, financial condition, earnings and prospects and of TiVo’s business, operations, financial condition, earnings and prospects, taking into account the results of Xperi’s due diligence review of TiVo;

 

   

the current and prospective business climate in the industry in which Xperi and TiVo operate;

 

   

the alternatives reasonably available to Xperi, including remaining a standalone entity, pursuing other strategic alternatives, including significantly reducing investment in Xperi’s IP licensing business, which the Xperi board evaluated with the assistance of its financial and legal advisors, and the Xperi board’s belief that the mergers with TiVo created the best reasonably available opportunity to maximize value for the Xperi stockholders given the potential risks, rewards and uncertainties associated with each alternative and without limiting strategic alternatives that HoldCo could pursue in the future;

 

   

the projected financial results of Xperi as a standalone company and the fit of the transaction with Xperi’s previously established strategic goals;

 

   

the fact that the market capitalization of each company was relatively equal at the time of the Xperi board’s evaluation of the mergers;

 

   

the recommendation of Xperi’s senior management in favor of the mergers;

 

   

the fact that four (4) members of the seven (7)-member HoldCo board will comprise members of the Xperi board as of immediately prior to the effective time;

 

   

the fact that senior management of the combined company will be principally comprised of senior management of Xperi as of immediately prior to the effective time, including the current Xperi Chief Executive Officer, Mr. Kirchner, who will also serve as the Chief Executive Officer of HoldCo and Mr. Andersen will serve as the Chief Financial Officer of HoldCo;

 

   

the terms and conditions of the merger agreement, including the strong commitments by both Xperi and TiVo to complete the mergers;

 

   

the Xperi board’s view, after consultation with its legal counsel, concerning the likelihood that regulatory approvals and clearances necessary to consummate the mergers would be obtained;

 

   

the expected tax-efficient treatment of the mergers for U.S. federal income tax purposes, as more fully described below under the section entitled “Adoption of the Merger Agreement—Material U.S. Federal Income Tax Consequences of the Mergers” beginning on page 129 of this joint proxy statement/prospectus;

 

   

the anticipated customer, supplier and stakeholder reaction to the mergers;

 

   

the Xperi board’s right to withhold, withdraw or change its recommendation to the Xperi stockholders to vote “FOR” the Xperi merger proposal if a superior proposal is available or an intervening event has occurred, subject to Xperi being obligated to pay TiVo a termination fee of $44,000,000 in the event Xperi terminates the merger agreement prior to the Xperi stockholders’ vote on the Xperi merger proposal or in certain other circumstances in which Xperi enters into an acquisition proposal agreement within twelve (12) months after the termination of the merger agreement;

 

   

the inability of TiVo to terminate the merger agreement in connection with the TiVo board withholding, withdrawing or changing its recommendation to the TiVo stockholders to vote “FOR” the TiVo merger proposal, and the ability of Xperi to terminate the merger agreement prior to the TiVo stockholders meeting and collection of a termination fee of $50,800,000 if such change of recommendation occurs;

 

   

the fact that Xperi has a proven track record of effectively executing complex transactions and integrating such businesses;

 

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TiVo’s ongoing litigation with Comcast and other service providers that has the potential to deliver significant upside to Xperi and TiVo’s existing stockholders; and

 

   

the opinion of Centerview rendered to the Xperi board on December 17, 2019, which was subsequently confirmed by delivery of a written opinion dated December 18, 2019 that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Xperi exchange ratio provided for pursuant to the merger agreement was fair, from a financial point of view, to the holders of shares of Xperi common stock (other than Xperi Excluded Shares), as more fully described below under the caption “Opinion of Xperi’s Financial Advisor;”

The Xperi board weighed these advantages and opportunities against a number of other risks and potential negative factors concerning the merger agreement and the mergers, including:

 

   

the challenges inherent in the merger of two businesses of the size, geographical diversity and scope of Xperi and TiVo and the size of the companies relative to each other, including the risk that integration costs may be greater than anticipated and the possible diversion of management attention for an extended period of time;

 

   

the difficulties of combining the businesses and workforces of Xperi and TiVo based on, among other things, differences in the cultures of the two companies;

 

   

the challenges inherent in the management and operation of a global business;

 

   

the volatility of the IP licensing business and the resources needed to enforce the combined company’s intellectual property;

 

   

TiVo’s right, subject to certain conditions, to respond to and negotiate with respect to certain acquisition proposals from third parties made prior to the time TiVo stockholders adopt the merger agreement;

 

   

the restrictions in the merger agreement on the conduct of each of Xperi’s and TiVo’s respective business during the period between execution of the merger agreement and the consummation of the mergers;

 

   

the risk that Xperi stockholders or TiVo stockholders may object to and challenge the mergers and take actions that may prevent or delay the consummation of the mergers, including to vote down the proposals at the Xperi special meeting or TiVo special meeting;

 

   

the risk that regulatory agencies may object to and challenge the mergers or may impose terms and conditions in order to resolve those objections that adversely affect the financial results of HoldCo; see the section entitled “Adoption of the Merger Agreement—Regulatory Approvals” beginning on page 119;

 

   

the risk that the pendency of the mergers for an extended period of time following the announcement of the execution of the merger agreement could have an adverse impact on Xperi or TiVo;

 

   

the potential for diversion of management and employee attention during the period prior to completion of the mergers, and the potential negative effects on Xperi’s and, ultimately, TiVo’s businesses;

 

   

the risk that, despite the efforts of Xperi and TiVo prior to the consummation of the mergers, Xperi and TiVo may lose key personnel, and the potential resulting negative effects on Xperi’s and, ultimately, HoldCo’s businesses;

 

   

the risk of not capturing all the anticipated cost savings and revenue synergies between Xperi and TiVo and the risk that other anticipated benefits might not be realized;

 

   

the effects of TiVo’s strategic review on its financial and operational results;

 

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the risk that the combined company may not be able to realize the benefits of TiVo’s net operating losses;

 

   

the increased leverage of HoldCo;

 

   

the risk that TiVo may not deliver on its cost transformation plan;

 

   

the possibility that HoldCo might not achieve its projected financial results;

 

   

the potential that the fixed exchange ratio under the merger agreement could result in Xperi delivering greater value to the TiVo stockholders than had been anticipated by Xperi should the value of the shares of Xperi common stock increase disproportionately from the date of the execution of the merger agreement;

 

   

the fact that the merger agreement prohibits each of Xperi and TiVo from soliciting or engaging in discussions regarding acquisition proposals during the pendency of the mergers, subject to limited exceptions;

 

   

the requirement that Xperi pay TiVo a $44,000,000 termination fee if the merger agreement is terminated under certain circumstances and the inability of Xperi to terminate the merger agreement in connection with a change of recommendation by the Xperi board, and the risks that such restrictions and termination fee may discourage third parties that might otherwise have an interest in a business combination with, or acquisition of, Xperi from making alternative proposals;

 

   

the risk that recent administrative, regulatory, legislative, and judicial changes and proposed changes to patent laws may adversely affect the business of the combined company;

 

   

the risk that new industry developments, including changes in consumer preferences, may adversely affect the business benefits anticipated to result from the mergers; and

 

   

the risks of the type and nature described under “Risk Factors” beginning on page 26 and the matters described under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page iv.

The foregoing discussion of the factors considered by the Xperi board is not intended to be exhaustive, but rather includes the principal factors considered by the Xperi board. In view of the wide variety of factors considered in connection with its evaluation of the mergers and the complexity of these matters, the Xperi board did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger agreement and to make its recommendations to Xperi stockholders. In addition, individual members of the Xperi board may have given differing weights to different factors. The Xperi board conducted an overall review of the factors described above, including thorough discussions with Xperi’s management and outside legal and financial advisor.

In considering the recommendation of the Xperi board to approve the Xperi merger proposal, Xperi stockholders should be aware that Xperi’s directors may have interests in the mergers that are different from, or in addition to, those of Xperi stockholders generally. For additional information, see the section entitled “Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Interests of Xperi Directors and Executive Officers in the Mergers” beginning on page 75 of this joint proxy statement/prospectus.

The explanation of the reasoning of the Xperi board and certain information presented in this section are forward-looking in nature and, therefore, the information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page iv of this joint proxy statement/prospectus.

Opinion of Xperi’s Financial Advisor

Centerview Partners LLC

On December 17, 2019, Centerview rendered to the Xperi board its oral opinion, subsequently confirmed in a written opinion dated December 18, 2019, that, as of such date and based upon and subject to various

 

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assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Xperi exchange ratio provided for pursuant to the merger agreement was fair, from a financial point of view, to the holders of shares of Xperi common stock (other than Xperi Excluded Shares).

The full text of Centerview’s written opinion, dated December 18, 2019, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex B and is incorporated herein by reference. The summary of the written opinion of Centerview set forth below is qualified in its entirety by the full text of Centerview’s written opinion attached as Annex B. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Xperi board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the mergers and Centerview’s opinion only addressed the fairness, from a financial point of view, as of the date thereof, to the holders of shares of Xperi common stock (other than Xperi Excluded Shares) of the Xperi exchange ratio provided for pursuant to the merger agreement. Centerview’s opinion did not address any other term or aspect of the merger agreement or the mergers and does not constitute a recommendation to any Xperi stockholder or any other person as to how such stockholder or other person should vote with respect to the mergers or otherwise act with respect to the mergers or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

In connection with rendering the opinion described above and performing its related financial analyses, Centerview reviewed, among other things:

 

   

a draft of the merger agreement dated December 17, 2019, referred to in this summary of Centerview’s opinion as the Draft Merger Agreement;

 

   

Annual Reports on Form 10-K of Xperi for the years ended December 31, 2018, December 31, 2017 and December 31, 2016;

 

   

Annual Reports on Form 10-K of TiVo for the years ended December 31, 2018, December 31, 2017 and December 31, 2016;

 

   

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Xperi and TiVo;

 

   

certain publicly available research analyst reports for Xperi and TiVo;

 

   

certain other communications from Xperi and TiVo to their respective stockholders;

 

   

certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of Xperi, including certain financial forecasts, analyses and projections relating to Xperi prepared by management of Xperi and furnished to Centerview by Xperi for purposes of Centerview’s analysis, which are referred to in this summary of Centerview’s opinion as the Xperi Forecasts, and which are collectively referred to in this summary of Centerview’s opinion as the Xperi Internal Data;

 

   

certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of TiVo prepared by management of TiVo and furnished to Centerview by Xperi for purposes of Centerview’s analysis, which are referred to in this summary of Centerview’s opinion as the “TiVo Internal Data,”

 

   

certain financial forecasts, analyses and projections relating to TiVo prepared by management of Xperi and furnished to Centerview by Xperi for purposes of Centerview’s analysis, which are referred to in this summary of Centerview’s opinion as the TiVo Forecasts; and

 

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certain tax and other cost savings and operating synergies projected by the management of Xperi to result from the mergers furnished to Centerview by Xperi for purposes of Centerview’s analysis, which are referred to in this summary of Centerview’s opinion as the Synergies.

Centerview also participated in discussions with members of the senior management and representatives of Xperi regarding their assessment of the Xperi Internal Data (including, without limitation, the Xperi Forecasts), the TiVo Internal Data, the TiVo Forecasts and the Synergies, as appropriate and the strategic rationale for the mergers. In addition, Centerview reviewed publicly available financial and stock market data, including valuation multiples, for Xperi and TiVo and compared that data with similar data for certain other companies, the securities of which are publicly traded, in lines of business that Centerview deemed relevant.

Centerview assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by Centerview for purposes of its opinion and, with Xperi’s consent, Centerview relied upon such information as being complete and accurate. In that regard, Centerview assumed, at Xperi’s direction, that the Xperi Internal Data (including, without limitation, the Xperi Forecasts), the TiVo Forecasts and the Synergies were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Xperi as to the matters covered thereby and that the TiVo Internal Data have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of TiVo as to the matters covered thereby and Centerview relied, at Xperi’s direction, on the Xperi Internal Data (including, without limitation, the Xperi Forecasts), the TiVo Internal Data, the TiVo Forecasts and the Synergies for purposes of Centerview’s analysis and opinion. Centerview expressed no view or opinion as to the Xperi Internal Data (including, without limitation, the Xperi Forecasts), the TiVo Internal Data, the TiVo Forecasts, the Synergies or the assumptions on which they were based. In addition, at Xperi’s direction, Centerview did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of Xperi or TiVo, nor was Centerview furnished with any such evaluation or appraisal, and was not asked to conduct, and did not conduct, a physical inspection of the properties or assets of Xperi or TiVo. Centerview assumed, at Xperi’s direction, that the final executed merger agreement would not differ in any respect material to Centerview’s analysis or opinion from the Draft Merger Agreement reviewed by Centerview. Centerview also assumed, at Xperi’s direction, that the mergers will be consummated on the terms set forth in the merger agreement and in accordance with all applicable laws and other relevant documents or requirements, without delay or the waiver, modification or amendment of any term, condition or agreement, the effect of which would be material to Centerview’s analysis or Centerview’s opinion and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the mergers, no delay, limitation, restriction, condition or other change, including any divestiture requirements or amendments or modifications, will be imposed, the effect of which would be material to Centerview’s analysis or Centerview’s opinion. Centerview also assumed that the mergers will have the tax consequences described in discussions with representatives of Xperi. Centerview did not evaluate and did not express any opinion as to the solvency or fair value of Xperi or TiVo, or the ability of Xperi or TiVo to pay their respective obligations when they come due, or as to the impact of the mergers on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. Centerview is not a legal, regulatory, tax or accounting advisor, and Centerview expressed no opinion as to any legal, regulatory, tax or accounting matters.

Centerview’s opinion expressed no view as to, and did not address, Xperi’s underlying business decision to proceed with or effect the mergers, or the relative merits of the mergers as compared to any alternative business strategies or transactions that might be available to Xperi or in which Xperi might engage. Centerview’s opinion was limited to and addressed only the fairness, from a financial point of view, as of the date of Centerview’s written opinion, to the holders of the shares of Xperi common stock (other than Xperi Excluded Shares) of the Xperi exchange ratio provided for pursuant to the merger agreement. For purposes of its opinion, Centerview was not asked to, and Centerview did not, express any view on, and its opinion did not address, any other term or aspect of the merger agreement or the mergers, including, without limitation, the structure or form of the mergers, or any other agreements or arrangements contemplated by the merger agreement or entered into in

 

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connection with or otherwise contemplated by the mergers, including, without limitation, the fairness of the mergers or any other term or aspect of the mergers to, or any consideration to be received in connection therewith by, or the impact of the mergers on, the holders of any other class of securities, creditors or other constituencies of Xperi or any other party. In addition, Centerview expressed no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors or employees of Xperi or any party, or class of such persons in connection with the mergers, whether relative to the Xperi exchange ratio provided for pursuant to the merger agreement or otherwise. Centerview’s opinion, as expressed therein, related, in part, to the relative values of Xperi and TiVo. Centerview’s opinion was necessarily based on financial, economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information made available to Centerview as of, the date of Centerview’s written opinion, and Centerview does not have any obligation or responsibility to update, revise or reaffirm its opinion based on circumstances, developments or events occurring after the date of Centerview’s written opinion. Centerview’s opinion expressed no view or opinion as to what the value of shares of HoldCo common stock actually will be when issued pursuant to the mergers or the prices at which shares of Xperi common stock, shares of TiVo common stock or shares of HoldCo common stock will trade or otherwise be transferable at any time, including following the announcement or consummation of the mergers. Centerview’s opinion does not constitute a recommendation to any Xperi stockholder or any other person as to how such stockholder or other person should vote with respect to the mergers or otherwise act with respect to the mergers or any other matter. Centerview’s financial advisory services and its written opinion were provided for the information and assistance of the Xperi board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the mergers. The issuance of Centerview’s opinion was approved by the Centerview Partners LLC Fairness Opinion Committee.

Summary of Centerview Financial Analysis

The following is a summary of the material financial analyses prepared and reviewed with the Xperi board in connection with Centerview’s opinion, dated December 18, 2019. The summary set forth below does not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, Centerview, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Centerview. Centerview may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarized below should not be taken to be Centerview’s view of the actual value of Xperi or TiVo. Some of the summaries of the financial analyses set forth below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses performed by Centerview. Considering the data in the tables below without considering all financial analyses or factors or the full narrative description of such analyses or factors, including the methodologies and assumptions underlying such analyses or factors, could create a misleading or incomplete view of the processes underlying Centerview’s financial analyses and its opinion. In performing its analyses, Centerview made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Xperi or any other parties to the mergers. None of Xperi, TiVo, HoldCo, Xperi Merger Sub, TiVo Merger Sub or Centerview or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of Xperi and TiVo do not purport to be appraisals or reflect the prices at which Xperi or TiVo may actually be sold. Accordingly, the assumptions and estimates used in, and the results derived from, the financial analyses are inherently subject to substantial uncertainty. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before December 16, 2019, and is not necessarily indicative of current market conditions.

 

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Relative Valuation Analysis

Centerview performed a relative valuation analysis of the implied common equity value of Xperi to the implied common equity value of TiVo based on the valuation analyses below. This analysis was undertaken to assist the Xperi board in understanding how the Xperi exchange ratio compared to the ranges of exchange ratios implied by each of the valuation analyses below and also how Xperi stockholders’ ownership in the combined company implied by the Xperi exchange ratio compared to the ranges of ownership implied by each of the valuation analyses below.

Selected Public Company Analysis—TiVo

Centerview reviewed and compared certain financial information, ratios and multiples for TiVo to corresponding financial information, ratios and multiples for publicly traded companies that Centerview deemed comparable, based on its experience and professional judgment, to TiVo’s IP licensing business and TiVo’s product sales business. The selected public companies consisted of:

IP Licensing Peers

 

   

Dolby Laboratories, Inc.;

 

   

InterDigital Wireless Inc.;

 

   

Rambus Incorporated; and

 

   

Xperi.

Product Peers

 

   

Telefonaktiebolaget LM Ericsson;

 

   

Nielsen Holdings Plc;

 

   

CommScope Inc.;

 

   

Harmonic Inc.;

 

   

Technicolor SA;

 

   

Kudelski SA;

 

   

comScore, Inc.; and

 

   

SeaChange International.

Although none of the selected companies is directly comparable to TiVo, the companies listed above were chosen by Centerview based on its professional judgment and, among other reasons, because they are publicly traded companies with certain operational, business and/or financial characteristics that, for purposes of Centerview’s analysis, may be considered similar to those of TiVo’s IP licensing business and TiVo’s product sales business. However, because none of the selected companies is exactly the same as TiVo, Centerview believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected public company analysis. Accordingly, Centerview also made qualitative judgments, based on its experience and professional judgment, concerning differences between the business, financial and operating characteristics and prospects of TiVo and the selected companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis.

Centerview calculated and compared financial multiples for the selected comparable companies based on information it obtained from SEC filings, FactSet (a data source containing historical and estimated financial data) and other Wall Street research, and closing stock prices on December 16, 2019. With respect to each of the

 

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selected comparable companies, Centerview calculated enterprise value (calculated as the equity value (taking into account outstanding in-the-money options, warrants and other convertible securities based on the treasury stock method) plus the book value of debt less cash) as a multiple of estimated earnings before interest, taxes, depreciation and amortization, which is referred to as EBITDA, adjusted for stock-based compensation, for the applicable company for the twelve (12) month period ending December 31, 2020, which is referred to in this section as “NTM.”

The results of this analysis are summarized as follows:

 

Companies

   Enterprise
Value1
     Enterprise Value/NTM
Estimated EBITDA
 

IP Licensing Peers

     

Dolby Laboratories, Inc.

   $ 6,102        11.9x  

InterDigital Wireless Inc.

     1,307        9.1x  

Rambus Incorporated

     1,421        9.4x  

Xperi

     1,378        9.4x  

75th Percentile

        11.3x  

Median

        9.4x  

25th Percentile

        9.1x  

Product Peers

     

Telefonaktiebolaget LM Ericsson

   $ 30,603        9.3x  

Nielsen Holdings Plc

     15,482        8.2x  

CommScope Inc.

     13,559        9.3x  

Harmonic Inc.

     869        16.9x  

Technicolor SA

     1,796        5.1x  

Kudelski SA

     732        7.7x  

comScore, Inc.

     486        n.a.  

SeaChange International

     159        10.3x  

75th Percentile

        10.3x  

Median

        9.3x  

25th Percentile

        7.7x  

(1) $ in U.S. millions

Based on its experience and professional judgment, for purposes of its analysis Centerview selected a reference range of multiples of enterprise value to estimated EBITDA (adjusted for stock-based compensation) for the twelve (12) month period ending December 31, 2020 of 8.0x to 11.0x. In selecting this reference range, Centerview made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics and prospects of TiVo and the selected public companies that could affect the public trading values in order to provide a context in which to consider the results of the quantitative analysis. Centerview applied the EBITDA multiple reference range to TiVo’s adjusted 2020 EBITDA as reflected in the adjusted TiVo forecasts of $229 million, to derive a range of implied enterprise values for TiVo, and subtracted from this range of implied enterprise values TiVo’s projected debt as of December 31, 2019, as set forth in the TiVo Internal Data, to derive a range of implied equity values for TiVo. Centerview then divided these implied equity values by the number of fully diluted shares of TiVo common stock as set forth in the TiVo Internal Data to derive an illustrative range of implied values per share of TiVo common stock of approximately $9.05 to $14.20, rounded to the nearest $0.05. Centerview compared this range to the closing price per share of TiVo common stock on December 16, 2019 of $7.48.

Sum-of-the-Parts Discounted Cash Flow Analysis—TiVo

Centerview also performed a sum-of-the-parts discounted cash flow analysis of TiVo. A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the

 

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“present value” of estimated future cash flows of the asset. “Present value” refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors. Centerview calculated the sum-of-the-parts discounted cash flow of: (i) TiVo’s IP licensing business, (ii) TiVo’s product business and (iii) TiVo’s net operating losses, in each case based on the TiVo Internal Data and the adjusted TiVo forecasts.

In evaluating TiVo’s IP licensing business, Centerview calculated the estimated present value of the projected unlevered fully-taxed free cash flows of TiVo’s IP licensing business from the fiscal years ended December 31, 2020 through 2024 based on the adjusted TiVo forecasts plus the present value of an implied terminal value in 2024 (calculated by Centerview applying perpetuity growth rates ranging from (2.0%) to 0.0%, which Centerview selected based on its professional judgment), discounted to December 31, 2019. Discount rates ranging from 9.25% to 11.00% (reflecting Centerview’s analysis of TiVo’s weighted average cost of capital which was calculated using the Capital Asset Pricing Model and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including levered and unlevered betas for comparable companies and the mid-year convention) were selected to derive an implied enterprise value reference range.

In evaluating TiVo’s product business, Centerview calculated the estimated present value of the projected unlevered fully-taxed free cash flows of Tivo’s product business from the fiscal years ended December 31, 2020 through 2024 based on the adjusted TiVo forecasts plus the present value of an implied terminal value in 2024 (calculated by Centerview applying perpetuity growth rates ranging from 1.0% to 2.0%, which Centerview selected based on its professional judgment), discounted to December 31, 2019. Discount rates ranging from 8.00% to 9.50% (reflecting Centerview’s analysis of TiVo’s weighted average cost of capital which was calculated using the Capital Asset Pricing Model and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including levered and unlevered betas for comparable companies and the mid-year convention) were selected to derive an implied enterprise value reference range.

In evaluating TiVo’s net operating losses, Centerview calculated the estimated present value of the projected unlevered fully-taxed free cash flows of TiVo’s net operating losses from the fiscal years ended December 31, 2020 through 2024 based on the adjusted TiVo forecasts, discounted to December 31, 2019. Discount rates ranging from 9.25% to 11.00% (reflecting Centerview’s analysis of TiVo’s weighted average cost of capital which was calculated using the Capital Asset Pricing Model and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including levered and unlevered betas for comparable companies and the mid-year convention) were selected to derive an implied enterprise value reference range.

Centerview calculated the sum of the three discounted cash flow values described above to generate a range of implied enterprise values for TiVo. Centerview then added to the discounted cash flow values for TiVo projected cash as of December 31, 2019 and subtracted from this range of implied enterprise values TiVo’s projected debt as of December 31, 2019, as set forth in the TiVo Internal Data, to derive a range of implied equity values for TiVo. Centerview then divided these implied equity values by the number of fully diluted shares of TiVo common stock as set forth in the TiVo Internal Data to derive an illustrative range of implied values per share of TiVo common stock of approximately $13.60 to $19.45, rounded to the nearest $0.05. Centerview compared this range to the closing price per share of TiVo common stock on December 16, 2019 of $7.48.

Other Factors—TiVo

Centerview noted for the Xperi board certain additional factors solely for informational purposes, including, among other things, the following:

 

   

Historical Stock Price Trading Analysis. Centerview reviewed the stock price performance of TiVo common stock for the 52-week period prior to December 16, 2019. Centerview noted that the range of

 

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low and high closing prices of TiVo common stock during the prior 52-week period was $6.69 to $11.59, as compared to the closing price per share of TiVo common stock on December 16, 2019 of $7.48.

 

   

Analyst Price Target Analysis. Centerview reviewed stock price targets for TiVo common stock reflected in three publicly available Wall Street research analyst reports as of December 16, 2019. Centerview noted that the analyst stock price targets in such research analyst reports were $11.00, $19.00 and $25.00 per share of TiVo common stock, as compared to the closing price per share of TiVo common stock on December 16, 2019 of $7.48.

Selected Public Company Analysis—Xperi

Centerview reviewed and compared certain financial information, ratios and multiples for Xperi under Scenario A to corresponding financial information, ratios and multiples for publicly traded companies that Centerview deemed comparable, based on its experience and professional judgment, to Xperi. The selected public companies consisted of:

 

   

Dolby Laboratories, Inc.;

 

   

InterDigital Wireless Inc.;

 

   

Rambus Incorporated;

 

   

IMAX Corporation;

 

   

TiVo;

 

   

Cerence Inc.; and

 

   

Technicolor SA.

Although none of the selected companies is directly comparable to Xperi, the companies listed above were chosen by Centerview based on its professional judgment and, among other reasons, because they are publicly traded companies with certain operational, business and/or financial characteristics that, for purposes of Centerview’s analysis, may be considered similar to those of Xperi. However, because none of the selected companies is exactly the same as Xperi, Centerview believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected public company analysis. Accordingly, Centerview also made qualitative judgments, based on its experience and professional judgment, concerning differences between the business, financial and operating characteristics and prospects of Xperi and the selected companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis.

Centerview calculated and compared financial multiples for the selected comparable companies based on information it obtained from SEC filings, FactSet and other Wall Street research, and closing stock prices on December 16, 2019. With respect to each of the selected comparable companies, Centerview calculated enterprise value (calculated as the equity value (taking into account outstanding in-the-money options, warrants and other convertible securities based on the treasury stock method) plus the book value of debt less cash) as a multiple of NTM EBITDA, adjusted for stock-based compensation, for the applicable company.

 

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The results of this analysis are summarized as follows:

 

Companies

   Enterprise Value1      Enterprise Value/NTM
Estimated EBITDA
 

Dolby Laboratories, Inc.

   $ 6,102        11.9x  

InterDigital Wireless Inc.

     1,307        9.1x  

Rambus Incorporated

     1,421        9.4x  

IMAX Corporation

     1,366        8.7x  

TiVo corporation

     1,636        8.3x  

Cerence, Inc.

     810        8.4x  

Technicolor SA

     1,796        5.1x  

75th Percentile

        9.4x  

Median

        8.7x  

25th Percentile

        8.3x  

 

(1)

$ in U.S. millions

Based on its experience and professional judgment, for purposes of its analysis Centerview selected a reference range of multiples of enterprise value to estimated EBITDA (adjusted for stock-based compensation) for the twelve (12) month period ending December 31, 2020 of 6.0x to 9.0x. In selecting this reference range, Centerview made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics and prospects of Xperi and the selected public companies that could affect the public trading values in order to provide a context in which to consider the results of the quantitative analysis. Centerview applied the EBITDA multiple reference range to Xperi’s adjusted 2020 EBITDA of $231 million under Xperi Scenario A, based on the Xperi Forecasts to derive a range of implied enterprise values for Xperi, and subtracted from this range of implied enterprise values Xperi’s projected debt as of December 31, 2019, as set forth in the Xperi Internal Data, to derive a range of implied equity values for Xperi. Centerview then divided these implied equity values by the number of fully diluted shares of Xperi common stock as set forth in the Xperi Internal Data to derive an illustrative range of implied values per share of Xperi common stock of approximately $21.90 to $35.00. Centerview compared this range to the closing price per share of Xperi common stock on December 16, 2019 of $21.09.

Sum-of-the-Parts Discounted Cash Flow Analysis—Xperi

Centerview also performed a sum-of-the-parts discounted cash flow analysis of Xperi under Xperi scenario A and Xperi scenario B. Centerview calculated the sum-of-the-parts discounted cash flow of Xperi’s: (i) IP licensing business, (ii) product licensing business and (iii) new product line, in each case based on the Xperi Internal Data (including the Xperi Forecasts).

IP Licensing Business

Centerview performed a sum-of-the-parts analysis of Xperi’s IP licensing business under Xperi IP licensing scenario A, based on a discounted cash flow analysis representing the implied present value of the projected unlevered fully-taxed free cash flows of Xperi’s IP licensing business from the fiscal years ended December 31, 2020 through 2024, based on the Xperi Forecasts plus the present value of an implied terminal value in 2024 (calculated by Centerview applying perpetuity growth rates ranging from (4.0%) to 0.0%, which Centerview selected based on its professional judgment), discounted to December 31, 2019. Discount rates ranging from 9.5% to 11.25% (reflecting Centerview’s analysis of Xperi’s weighted average cost of capital which was calculated using the Capital Asset Pricing Model and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including levered and unlevered betas for comparable companies and the mid-year convention) were selected to derive an implied enterprise value reference range.

 

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Centerview performed a sum-of-the-parts analysis of Xperi’s IP licensing business under Xperi IP licensing scenario B, based on a discounted cash flow analysis representing the implied present value of the projected unlevered fully-taxed free cash flows of Xperi’s IP licensing business from the fiscal years ended December 31, 2020 through 2024, based on the Xperi Forecasts. Discount rates ranging from 9.5% to 11.25% (reflecting Centerview’s analysis of Xperi’s weighted average cost of capital which was calculated using the Capital Asset Pricing Model and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including levered and unlevered betas for comparable companies and the mid-year convention) were selected to derive an implied enterprise value reference range and assuming no cash flows generated beyond the year ending December 31, 2024.

Product Licensing Business

Centerview performed a sum-of-the-parts analysis of Xperi’s product licensing business under both Xperi scenario A and Xperi scenario B based on a discounted cash flow analysis representing the implied present value of the projected unlevered fully-taxed free cash flows of Xperi’s product licensing business from the fiscal years ended December 31, 2020 through 2029, based on the Xperi Forecasts plus the present value of an implied terminal value in 2029 (calculated by Centerview applying perpetuity growth rates ranging from 1.0% to 2.0%, which Centerview selected based on its professional judgment), discounted to December 31, 2019. Discount rates ranging from 9.5% to 11.25% (reflecting Centerview’s analysis of Xperi’s weighted average cost of capital which was calculated using the Capital Asset Pricing Model and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including levered and unlevered betas for comparable companies and the mid-year convention) were selected to derive an implied enterprise value reference range.

New Product Line

Centerview performed a sum-of-the-parts analysis of Xperi’s new product line business under both Xperi scenario A and Xperi scenario B based on a discounted cash flow analysis representing the implied present value of the projected unlevered fully-taxed free cash flows of Xperi’s new product line from the fiscal years ended December 31, 2020 through 2029, based on the Xperi Forecasts plus the present value of an implied terminal value in 2029 (calculated by Centerview applying perpetuity growth rates ranging from 3.0% to 5.0%, which Centerview selected based on its professional judgment), discounted to December 31, 2019. Discount rates ranging from 15.0% to 18.0% (reflecting Centerview’s analysis of Xperi’s weighted average cost of capital which was calculated using the Capital Asset Pricing Model and based on considerations that Centerview deemed relevant in its professional judgment and experience, taking into account certain metrics including levered and unlevered betas for comparable companies and the mid-year convention) were selected to derive an implied enterprise value reference range.

Xperi Scenario A Calculations

Centerview calculated the sum of the three discounted cash flow values described above under Xperi scenario A to derive a range of implied enterprise values for Xperi, and subtracted from this range of implied enterprise values Xperi’s projected debt as of December 31, 2019, as set forth in the Xperi Internal Data, to derive a range of implied equity values for Xperi. Centerview then divided these implied equity values by the number of fully diluted shares of Xperi common stock as set forth in the Xperi Internal Data to derive an illustrative range of implied values per share of Xperi common stock of approximately $37.10 to $53.45, rounded to the nearest $0.05. Centerview compared this range to the closing price per share of Xperi common stock on December 16, 2019 of $21.09.

Xperi Scenario B Calculations

Centerview calculated the sum of the three discounted cash flow values described above under Xperi scenario B to derive a range of implied enterprise values for Xperi, and subtracted from this range of implied

 

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enterprise values Xperi’s projected debt as of December 31, 2019, as set forth in the Xperi Internal Data, to derive a range of implied equity values for Xperi. Centerview then divided these implied equity values by the number of fully diluted shares of Xperi common stock as set forth in the Xperi Internal Data to derive an illustrative range of implied values per share of common stock of approximately $29.85 to $41.65, rounded to the nearest $0.05. Centerview compared this range to the closing price per share of Xperi common stock on December 16, 2019 of $21.09.

Other Factors—Xperi

Centerview noted for the Xperi board certain additional factors solely for informational purposes, including, among other things, the following:

 

   

Historical Stock Price Trading Analysis. Centerview reviewed the stock price performance of Xperi common stock for the 52-week period prior to December 16, 2019. Centerview noted that the range of low and high closing prices of Xperi common stock during the prior 52-week period was $16.88 to $25.70, as compared to the closing price per share of Xperi common stock on December 16, 2019 of $21.09.

 

   

Analyst Price Target Analysis. Centerview reviewed stock price targets for Xperi common stock reflected in four publicly available Wall Street research analyst reports as of December 16, 2019. Centerview noted that the analyst stock price targets in such research analyst reports ranged from $25.00 to $33.00 per share of Xperi common stock, as compared to the closing price per share of Xperi common stock on December 16, 2019 of $21.09.

Relative Value Analysis

For each of the above valuation analyses Centerview calculated a range of implied exchange ratios based on the number of fully diluted shares of Xperi common stock and TiVo common stock, assuming each share of TiVo is exchanged for 0.455 shares of common stock of the combined company (the TiVo exchange ratio), by calculating the low point of the range for each such analysis based on the low implied common equity value of Xperi from such analysis and the high implied common equity value of TiVo from the corresponding analysis and calculating the high point of the range for each such analysis based on the high implied common equity value of Xperi from such analysis and the low implied common equity value of TiVo from the corresponding analysis. In addition, Centerview then calculated ranges of the implied relative ownership of the Xperi stockholders in the combined company after giving effect to the mergers under each of the above valuation analyses, by calculating the low point of the range for each such analysis by dividing the low implied common equity value of Xperi from such analysis by the sum of such low implied common equity value of Xperi and the high implied common equity value of TiVo from the corresponding analysis and calculating the high point of the range for each such analysis by dividing the high implied common equity value of Xperi from such analysis by the sum of such high implied common equity value of Xperi and the low implied common equity value of TiVo from the corresponding analysis. The following table sets forth the ranges of implied exchange ratios and implied relative ownership calculated by Centerview in this analysis. Centerview noted for the Xperi board solely for informational purposes the ranges of implied exchange ratios and implied relative ownership under the relative value analysis in respect of the 52-week trading range analysis and the analyst price target analysis above.

 

Valuation Methodology

   Range of Implied Exchange
Ratios for Xperi
   Range of Implied Ownership of
the Combined Company by
Xperi Stockholders

Trading Multiples Analysis (Xperi scenario A)

   0.702x-1.760x    38%-61%

Sum-of-the-Parts DCF (Xperi scenario A)

   0.868x-1.788x    43%-61%

Sum-of-the-Parts DCF (Xperi scenario B)

   0.698x-1.393x    38%-55%

52-Week Trading Range (For Reference Only)

   0.663x-1.748x    37%-60%

Analyst Price Target (For Reference Only)

   0.455x-1.365x    28%-54%

Centerview compared the above ranges of implied exchange ratios for Xperi to 1.000x, the Xperi exchange ratio. Centerview also compared the above ranges of implied Xperi relative ownership to 46.6%, the relative

 

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ownership of the combined company (calculated on a fully diluted basis) that Xperi stockholders would have after giving effect to the mergers as contemplated by the merger agreement.

“Has” / “Gets” Analysis

Centerview compared the implied stand-alone equity value of Xperi to the pro forma equity value attributable to Xperi stockholders after giving effect to the mergers, including the Synergies, in each case based on the current market capitalization of Xperi and TiVo, from the perspective of the holders of Xperi common stock. In performing this illustrative “has / gets” analysis, Centerview calculated the implied enterprise value of the combined company on a pro forma basis, giving effect to the mergers and the Synergies (calculated using a blend of the multiples applied to Xperi and TiVo adjusted EBITDA), and subtracted from this pro forma enterprise value the estimated pro forma net debt as of December 31, 2019, adjusted to reflect transaction costs. This analysis resulted in an implied equity value for the combined company on a pro forma assumed basis of approximately $2,840 million. Centerview then multiplied this implied pro forma equity value by 46.6%, representing the Xperi stockholders’ pro forma ownership of the combined company (calculated on a fully diluted basis), to imply a pro forma equity value attributable to the Xperi stockholders of approximately $1,323 million or $25.15 per share, rounded to the nearest $0.05. Centerview compared this implied value to the equity value implied by the market capitalization of Xperi of $1,109 million or $21.09 per share (calculated on a fully diluted basis) on December 16, 2019.

Centerview also compared the implied stand-alone equity value of Xperi to the pro forma equity value attributable to Xperi stockholders after giving effect to the mergers, including the Synergies in each case based on Centerview’s discounted cash flow analyses, using the midpoints of its ranges of discount rates and perpetuity growth rates, for Xperi and TiVo and of the Synergies (calculated using discount rates which Centerview selected based on its professional judgment), from the perspective of the holders of Xperi common stock. In performing this illustrative “has / gets” analysis, Centerview calculated the implied enterprise value of the combined company on a pro forma assumed basis, giving effect to the mergers and the Synergies, and subtracted from this pro forma enterprise value the estimated pro forma net debt as of December 31, 2019, adjusted to reflect transaction costs. This analysis resulted in an implied equity value for the combined company on a pro forma assumed basis of approximately $5,205 million. Centerview then multiplied this implied pro forma equity value by 46.6%, representing the Xperi stockholders’ pro forma ownership of the combined company (calculated on a fully diluted basis), to imply a pro forma equity value attributable to the Xperi stockholders of approximately $2,424 million or $46.00 per share, rounded to the nearest $0.05. Centerview compared this implied value to the equity value implied by its discounted cash flow analysis of Xperi, on a standalone basis and using the midpoints of its ranges of discount rates and perpetuity growth rates under Xperi scenario A, of $2,277 million or $43.25 per share (calculated on a fully diluted basis).

Centerview prepared a sensitivity analysis of the discounted cash flow values calculated above, calculated on a pro forma basis for the combined company, including the Synergies. Centerview performed this analysis based on the low, mid and high points of the equity value ranges based on the discounted cash flow analyses for Xperi (based on Xperi scenario A) and TiVo. In each case, Centerview added the equity values of Xperi and TiVo plus the Synergies (calculated using discount rates which Centerview selected based on its professional judgment) to calculate the implied equity value of the combined company. Centerview then multiplied these pro forma equity values by 46.6%, representing the Xperi stockholders’ pro forma ownership of the combined company (calculated on a fully diluted basis), to imply the pro forma equity values attributable to the Xperi stockholders and on a per share basis based on the number of fully diluted shares of Xperi common stock as set forth in the Xperi Internal Data. Centerview compared these implied values per share to the implied values per share of Xperi common stock at the applicable point of the range of the discounted cash flow values for Xperi

 

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under Xperi scenario A and Xperi scenario B, as well as to the closing price per share of Xperi common stock on December 16, 2019. The results of this analysis are summarized as follows:

 

          Value Accretion

Scenario Overview

(DCF Value)

   Equity
Value
   Xperi Pro Forma Equity Value per share of combined
company compared to:

Xperi

(Scenario A)

   TiVo /
Synergy
   Xperi Pro Forma Equity Value
per share of combined company
   Xperi
Scenario A
  Xperi
Scenario B
  December 16, 2019
Stock Price

High

   High    $56.15    5%   35%   166%

Mid

   Mid    $46.00    6%   34%   118%

Low

   Low    $39.10    5%   31%   85%

High

   Low    $46.75    (13%)   12%   122%

Low

   High    $48.50    31%   62%   130%

General

The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. In arriving at its opinion, Centerview did not draw, in isolation, conclusions from or with regard to any factor or analysis that it considered. Rather, Centerview made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses.

Centerview’s financial analyses and opinion were only one of many factors taken into consideration by the Xperi board in its evaluation of the mergers. Consequently, the analyses described above should not be viewed as determinative of the views of the Xperi board or management of Xperi with respect to the Xperi exchange ratio or as to whether the Xperi would have been willing to determine that a different exchange ratio was fair. The exchange ratio for the transaction was determined through arm’s-length negotiations between Xperi and TiVo and was approved by the Xperi board. Centerview provided advice to Xperi during these negotiations. Centerview did not, however recommend any specific amount of exchange ratio to Xperi or the Xperi board or that any specific amount of exchange ratio constituted the only appropriate exchange ratio for the transaction.

Centerview is a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial advisory and merchant banking activities. In the two years prior to the date of its written opinion, Centerview has been engaged to provide certain financial advisory services to Xperi, including acting as financial advisor to Xperi with respect to certain strategic matters, but Centerview has not received any compensation from Xperi for such services. In the two years prior to the date of its written opinion, Centerview has not been engaged to provide financial advisory or other services to TiVo, and Centerview has not received any compensation from TiVo during such period. Centerview may provide investment banking and other services to or with respect to Xperi, TiVo, HoldCo or their respective affiliates in the future, for which Centerview may receive compensation. Certain (i) of Centerview’s and Centerview’s affiliates’ directors, officers, members and employees, or family members of such persons, (ii) of Centerview’s affiliates or related investment funds and (iii) investment funds or other persons in which any of the foregoing may have financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and other securities or financial instruments (including derivatives, bank loans or other obligations) of, or investments in, Xperi, TiVo, or any of their respective affiliates, or any other party that may be involved in the mergers.

The Xperi board selected Centerview as its financial advisor in connection with the mergers based on Centerview’s reputation and experience. Centerview is an internationally recognized investment banking firm that has substantial experience in transactions similar to the mergers.

In connection with Centerview’s services as the financial advisor to the Xperi board, Xperi has agreed to pay Centerview an aggregate fee expected to be approximately $12,000,000 based on the closing price of Xperi common stock on December 17, 2019, $1,750,000 of which was payable upon the rendering of Centerview’s

 

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opinion and the balance of which is payable contingent upon consummation of the mergers. In addition, Xperi has agreed to reimburse certain of Centerview’s expenses arising, and to indemnify Centerview against certain liabilities that may arise, out of Centerview’s engagement.

Interests of Xperi Directors and Executive Officers in the Mergers

In considering the recommendation of the Xperi board that you vote to approve the Xperi merger, you should be aware that Xperi’s directors and current and certain former executive officers have certain financial interests in the mergers that may be different from, or in addition to, those of Xperi stockholders generally. The Xperi board was aware of and considered these potential interests, among other matters, in evaluating and negotiating the merger agreement and in recommending to you that you vote to approve the adoption of the merger agreement. These interests are further described below.

The consummation of the mergers is expected to constitute a “change in control” for purposes of each of the Xperi compensation plans and agreements. Certain of Xperi’s current directors and executive officers will continue to serve as directors and executive officers of HoldCo following the consummation of the mergers, as discussed in more detail in “—Other New Arrangements with Current or Former Executive Officers” below and the section entitled “Adoption of the Merger Agreement—HoldCo Matters—HoldCo Governance” beginning on page 117.

Xperi Equity Compensation Awards

Treatment of Xperi Stock Options

Each outstanding Xperi stock option, whether vested or unvested, will be automatically converted at the effective time into an option to purchase, on the same terms and conditions (including any applicable vesting and exercisability requirements) as were applicable to such Xperi stock option immediately prior to the effective time, one (1) share of HoldCo common stock, at an exercise price per share equal to the per-share exercise price of the Xperi stock option.

Treatment of Xperi RSUs

Each outstanding Xperi restricted stock unit award, whether vested or unvested, which we refer to as an Xperi RSU award, will be automatically converted at the effective time into one (1) HoldCo restricted stock unit award, which we refer to as a HoldCo RSU award, on the same terms and conditions (including any applicable vesting and settlement requirements) as were applicable to such Xperi RSU award immediately prior to the effective time.

Treatment of Xperi PSUs

Each Xperi RSU award that is subject to performance-vesting based on the achievement of performance metrics immediately prior to the effective time, which we refer to as an Xperi PSU award, will be automatically converted at the effective time into one (1) HoldCo RSU award, on the same terms and conditions (including any applicable performance-based vesting criteria and settlement requirements) as were applicable to such Xperi PSU award immediately prior to the effective time, except as described below in the sections of this joint proxy statement entitled “—Treatment of Xperi PSU Awards held by Jon Kirchner” beginning on page 76 and “—Treatment of Xperi PSU Awards held by Murali Dharan” beginning on page 76.

Xperi Stock Options, RSUs and PSUs to be Assumed and Converted in the Merger

The following table sets forth information relating to the Xperi stock options, RSUs and PSUs held by directors and executive officers that are expected to be assumed and converted at the effective time into HoldCo equity awards. The amounts listed below are estimates based on an assumed closing date of May 29, 2020 and the equity award holdings of each individual as of such date. However, the actual number of Xperi stock options,

 

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RSUs and PSUs to be assumed and converted into HoldCo equity awards will depend on the number of those awards that are held by such individuals and outstanding on the actual effective time of the Merger.

 

SUBJECT TO ASSUMPTION/CONVERSION:

 

Name

  Unvested
Options (#)
    Vested
Options (#)
    Unvested
RSUs (#)
    Vested
RSUs (#)
    Unvested
PSUs (#)(3)
    Vested
PSUs (#)
 

Jon Kirchner(1)

    —         129,007       70,365       —         172,936       —    

Robert Andersen

    —         39,000       75,162       —         —         —    

Richard S. Hill

    —         —         —         —         —         —    

Paul Davis

    —         13,800       49,790       —         —         —    

Geir Skaaden

    —         16,909       54,790       —         —         —    

Christopher Seams

    —         —         —         —         —         —    

Murali Dharan(2)

    35,000       35,000       38,790       —         102,000       —    

George A. Riedel

    —         —         —         —         —         —    

David Habiger

    —         —         —         —         —         —    

Sue Molina

    —         —         —         —         —         —    

Darcy Antonellis

    —         —         —         —         —         —    

 

(1)

For the PSUs granted to Jon Kirchner on each of March 1, 2017 and June 1, 2017, as of the effective time, the number of PSUs subject to performance-vesting for FY 2020 will be deemed earned at target and converted into time-based RSUs, with such target number of RSUs becoming scheduled to vest on December 31, 2020, subject to Mr. Kirchner’s continued service through such vesting date.

(2)

For the grant of 84,000 PSUs made to Murali Dharan on October 16, 2017, as of the effective time, the number of PSUs subject to performance-vesting for FY 2020 will be deemed earned at target and converted into time-based RSUs, with such target number of RSUs becoming scheduled to vest ratably in two equal installments on each of December 31, 2020 and 2021, subject to Mr. Dharan’s continued service through the applicable vesting date.

(3)

Outstanding PSUs are listed at their maximum levels which is 200% of the target award levels.

Treatment of Xperi PSU Awards held by Jon Kirchner

Pursuant to the terms of the Xperi PSU Awards granted to Jon Kirchner on each of March 1, 2017 and June 1, 2017, the annual performance vesting criteria applicable to each award will be mutually agreed between Mr. Kirchner and the compensation committee of Xperi’s board of directors. If the closing of the merger occurs during Xperi’s 2020 fiscal year, it is anticipated that the number of restricted stock units subject to performance-based vesting criteria for such 2020 fiscal year under each of those Xperi PSU Awards will be deemed earned at target and converted into time-based restricted stock units, with such target number of restricted stock units becoming scheduled to vest on December 31, 2020, subject to Mr. Kirchner’s continued service through such vesting date.

Treatment of Xperi PSU Awards held by Murali Dharan

If the closing of the mergers occurs during Xperi’s 2020 fiscal year, it is anticipated that the number of restricted stock units subject to performance-based vesting criteria for such 2020 fiscal year for the grant of 84,000 PSUs made to Murali Dharan on October 16, 2017 will be deemed earned at target and converted into time-based restricted stock units, with such target number of restricted stock units becoming scheduled to vest ratably in two equal installments on each of December 31, 2020 and 2021, subject to Mr. Dharan’s continued service through the applicable vesting date.

Xperi Employee Stock Purchase Plans

Each of the Xperi Amended and Restated Employee Stock Purchase Plan and the Xperi Second Amended and Restated International Employee Stock Purchase Plan, which we refer to as the Xperi ESPPs, will, subject to the consummation of the mergers, terminate effective immediately prior to the effective time. The merger

 

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agreement, as amended, provides that any offering period under the Xperi ESPPs will terminate and all options to purchase shares of Xperi common stock under the Xperi ESPPs will be automatically exercised on the earlier to occur of the day that is four (4) trading days before the effective time or the date on which such offering period would otherwise end.

Executive Officer Interests

The current and certain former executive officers of Xperi are entitled to certain severance benefits upon a qualifying termination of employment, including cash payments, certain continued and additional benefits and accelerated vesting of equity awards.

Employment and Severance Agreement with Jon Kirchner

Effective April 28, 2017, Xperi entered into an employment and severance agreement with Mr. Kirchner, which we refer to as the Kirchner employment agreement. The Kirchner employment agreement provides that, if Mr. Kirchner’s employment is terminated by Xperi without cause or if he resigns for good reason, he will be entitled to receive the following severance payments and benefits:

 

   

a lump sum cash payment equal to two hundred-percent (200%) of his annual base salary;

 

   

Two hundred-percent (200%) multiplied by his target annual bonus for the calendar year in which termination occurs (which bonus shall be prorated for the portion of the calendar year that has elapsed prior to the date of termination if such termination occurs more than sixty (60) days prior to or more than eighteen (18) months following a change in control of Xperi);

 

   

continuation of health benefits for a period of up to twenty-four (24) months following the date of termination;

 

   

immediate acceleration of vesting of his outstanding equity awards that would have vested over the twelve (12)-month period following the date of his separation from service had he remained continuously employed during such period (with any performance awards that are eligible to vest based on performance for the fiscal year in which his termination occurs vesting at the target) (provided that if such termination occurs within sixty (60) days prior to or within eighteen (18) months following a change in control of Xperi, all of Mr. Kirchner’s unvested equity awards will vest (with performance awards vesting at target) on the later of the date of his termination or the date of the change in control);

 

   

a post-termination exercise period for his outstanding stock options of twelve (12) months from the date of termination, or, if earlier, the remaining life of the equity grants; and

 

   

his full bonus amount under the DTS, Inc. 2016 Executive Retention Bonus Plan and Letter Agreement.

The Kirchner employment agreement has an initial term that expires on June 1, 2020, subject to automatic renewal for an additional year unless either party gives ninety (90) days’ notice of nonrenewal. Nonrenewal of the initial three (3)-year term by Xperi will be deemed a termination without cause and will result in the payment of severance to Mr. Kirchner, while expiration of the term under any other circumstances will not be deemed a termination without cause and will not give rise to severance. The term of the Kirchner employment agreement will automatically be extended for eighteen (18) months following a change in control of Xperi if the term would otherwise have expired during such eighteen (18)-month period.

For an estimate of the value of the amounts that would be paid or become payable to Mr. Kirchner, assuming, among other things, that the mergers were completed on May 29, 2020 and the employment of Mr. Kirchner was terminated either by Xperi without cause or by Mr. Kirchner for good reason immediately thereafter, see the section of this joint proxy statement entitled “—Merger Related Compensation-Xperi” beginning on page 80.

 

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Severance Agreements with Messrs. Andersen, Davis, Dharan and Skaaden

Xperi entered into severance agreements with each of Messrs. Andersen, Davis, Dharan and Skaaden. The terms of the agreements with Messrs. Andersen, Davis and Skaaden are through February 2021, and Mr. Dharan’s agreement expires in October, 2021, or, if earlier, the date on which all payments or benefits required thereunder have been paid or provided in their entirety. Each term may be renewed by mutual agreement between Xperi and the executive. Each of the severance agreements provides that if the executive’s employment is terminated by us without cause or if the executive resigns for good reason, the executive will be entitled to receive the following payments and benefits:

 

   

his fully earned but unpaid base salary and his earned but unpaid vacation through the date of termination;

 

   

a lump sum cash payment equal to one hundred-percent (100%) of his annual base salary;

 

   

continuation of health benefits for a period of twelve (12) months following the date of termination; and

 

   

his target annual bonus for the calendar year in which termination occurs (which bonus shall be prorated for the portion of the calendar year that has elapsed prior to the date of termination).

The severance payments and benefits described above will be paid upon the executive’s execution of a general release of claims in favor of Xperi.

For an estimate of the value of the amounts that would be paid or become payable to each named executive officer, assuming, among other things, that the merger were completed on May 29, 2020 and the employment of the executive was terminated either by Xperi without cause or by the executive for good reason immediately thereafter, see the section of this joint proxy statement entitled “—Merger Related Compensation-Xperi” beginning on page 80.

Change in Control Severance Agreements with Messrs. Andersen, Davis, Dharan, Kirchner and Skaaden

Xperi has entered into change in control severance agreements with the following executives:

 

Executive Member

  

Title

   Severance Expiration
Date
   CIC Expiration Date

Geir Skaaden

   Chief Products & Services Officer    2/25/2021    2/25/2021

Jon Kirchner

   Chief Executive Officer    6/1/2020   

Murali Dharan

   President, Tessera Intellectual Property Corporation (Tessera)    10/16/2021    10/16/2021

Paul Davis

   General Counsel & Corporate Secretary    2/25/2021    2/25/2021

Robert Andersen

   Chief Financial Officer    2/25/2021    2/25/2021

The change in control severance agreements provide that, if an executive’s employment is terminated without cause or if the executive resigns for good reason, in either case, within sixty (60) days prior to or within eighteen (18) months following a change in control, the executive will be entitled to receive the following payments:

 

   

his or her fully earned but unpaid base salary and his or her earned but unpaid vacation through the date of termination;

 

   

a lump sum cash payment equal to one hundred-percent (100%) of the executive’s annual base salary;

 

   

his or her target annual bonus for the calendar year in which termination occurs;

 

   

continuation of health benefits for a period of up to twelve (12) months following the date of termination; and

 

   

immediate acceleration of vesting of the executive’s outstanding equity awards (with any performance-based awards vesting at target, except to the extent alternative acceleration is specifically provided for

 

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pursuant to the grant documents) as of the later of the date of termination or the date of such change in control.

The severance benefits described above will be reduced by any severance benefits payable to each of the executives identified above under their employment and severance agreements and will be paid upon the executive’s execution of a general release of claims in favor of Xperi and subject to their continued compliance with the confidentiality and proprietary rights covenant set forth in the change in control severance agreement.

For an estimate of the value of the amounts that would be paid or become payable to each of Xperi’s named executive officers, assuming, among other things, that the mergers were completed on May 29, 2020 and the employment of each named executive officer was terminated either by Xperi without cause or by the named executive officer for good reason immediately thereafter, see the section of this joint proxy statement entitled “—Merger Related Compensation-Xperi” beginning on page 80.

Defined Terms

For purposes of the Kirchner employment agreement, the severance agreements and the change in control severance agreements, “cause” means, generally, an executive’s gross negligence or willful misconduct in the performance of his duties, the executive’s willful and habitual neglect of or failure to perform his duties, the executive’s commission of any material act of fraud, dishonesty or financial or accounting impropriety with respect to Xperi which results in a personal benefit to the executive, the executive’s failure to cooperate with Xperi in any investigation or formal proceeding initiated by a governmental authority or otherwise approved by Xperi’s board of directors or the audit committee of the board of directors, the executive’s conviction of or plea of guilty or nolo contender to felony criminal conduct (other than moving vehicle violations), the executive’s material violation of our confidentiality and proprietary rights agreement or any similar agreement with Xperi, or the executive’s material breach of any obligation or duty under the agreement or any written employment or other written policies of Xperi.

For purposes of the Kirchner employment agreement, the severance agreements and the change in control severance agreements, “good reason” means, generally, a material diminution in the executive’s authority, duties or responsibilities, a material diminution in the executive’s base compensation or target bonus opportunity, unless such a reduction is imposed across-the-board to senior management, a material change in the geographic location at which the executive must perform his duties, or any other action that constitutes a material breach of the agreement.

For purposes of the Kirchner employment agreement, the severance agreements and the change in control severance agreements, “change in control” is generally defined as:

 

   

a merger or consolidation in which Xperi is a party, other than a merger or consolidation which results in Xperi’s outstanding voting securities immediately before the transaction continuing to represent a majority of the voting power of the acquiring company’s outstanding voting securities; or

 

   

the sale of all or substantially all of Xperi’s assets.

Other New Arrangements with Current or Former Executive Officers

Upon completion of the mergers, Jon Kirchner, current Chief Executive Officer of Xperi, will serve as Chief Executive Officer of HoldCo. It is also anticipated that, following completion of the mergers, Robert Andersen (current Chief Financial Officer of Xperi) will become the Chief Financial Officer of HoldCo. These appointments are further described below in “Adoption of the Merger Agreement—HoldCo Matters—HoldCo Governance—The HoldCo Chief Executive Officer and Chief Financial Officer” beginning on page 117. Other executive officers of Xperi may assume positions as executive officers of HoldCo upon or following completion of the mergers. Subject to the terms of the merger agreement, some or all of Xperi’s executive officers may, prior to the consummation of the mergers, enter into new employment agreements or arrangements or other retention arrangements with HoldCo, but the terms of such arrangements, if any, have not yet been determined.

 

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Indemnification of Xperi’s Directors and Officers

The merger agreement requires HoldCo to indemnify and hold harmless each former and present director and officer of Xperi or TiVo and any of their respective subsidiaries, and each person who was serving as a director, officer of another person at the request of Xperi or TiVo and any of their respective subsidiaries, each referred to as an indemnified party, to the same extent as such indemnified parties were indemnified as of the date of the merger agreement pursuant to the organizational documents of Xperi or TiVo or any of their respective subsidiaries, or any indemnification agreements in existence as of the date of the merger agreement.

The merger agreement also requires HoldCo to maintain for six (6) years following the mergers either the current policies of directors’ and officers’ liability insurance and fiduciary liability insurance currently maintained by each of Xperi and TiVo and any of their subsidiaries or provide substitute policies for not less than the existing coverage and having other terms not less favorable to the insured persons, except that in no event will the annual cost to HoldCo for maintaining such policies exceed three hundred-percent (300%) of the annual premium paid by Xperi or TiVo, as applicable, referred to as the maximum amounts. Each of Xperi and TiVo may obtain a six (6)-year “tail” policy under such party’s existing directors and officers insurance policy in lieu of the foregoing, in each case for a cost not to exceed the applicable maximum amount.

Merger Related Compensation-Xperi

In accordance with Item 402(t) of Regulation S-K, the table below sets forth the estimated amounts of compensation that are based on or otherwise relate to the mergers and that may be payable to those individuals who will be listed in the “Summary Compensation Table” that is part of Xperi’s most recent securities filing for which disclosure was required under Item 402(c) of Regulation S-K (the Form 10-K for the fiscal year ended December 31, 2019, which information is incorporated by reference from Xperi’s definitive proxy statement to be filed with the SEC not later than 120 days after the end of such fiscal year), who we refer to below as Xperi’s named executive officers. Assuming that the mergers were consummated on March 23, 2020 (the latest practicable date prior to filing this joint proxy statement/prospectus) and the employment of each of the named executive officers was terminated either by Xperi without cause or by the named executive officer for good reason within sixty days’ (60) prior to, or eighteen (18) months following the effective time, each named executive officer would receive approximately the amounts set forth in the table below, based on a $11.46 share price for each share of Xperi common stock (the closing share price for Xperi common stock on March 23, 2020).

See the section entitled “Adoption of the Merger Agreement—Recommendation of the Xperi Board of Directors—Interests of Xperi Directors and Executive Officers in the Mergers—Executive Officer Interests” beginning on page 77 for further information about the compensation disclosed in the table below. The amounts indicated below are estimates of amounts that might become payable to the named executive officers and the estimates are based on multiple assumptions that may or may not prove correct. Some of the assumptions are based on information not currently available and as a result the actual amounts, if any, received by a named executive officer may differ in material respects from the amounts set forth below.

Golden Parachute Compensation—Xperi

 

Named Executive Officer

   Cash(1) ($)      Equity(2) ($)      Perquisites/
Benefits(3) ($)
     Total ($)  

Jon Kirchner

     2,400,000        1,797,306        75,009        4,272,315  

Robert Andersen

     665,028        861,357        24,569        1,550,954  

Paul Davis

     564,212        570,593        28,888        1,163,693  

Murali Dharan

     800,000        1,372,793        36,830        2,209,623  

Geir Skaaden

     665,028        627,893        36,830        1,329,752  

 

(1)

For Mr. Kirchner only, this represents the double-trigger severance payable pursuant to the terms of the Kirchner employment agreement. Consists of a cash payment equivalent to (a) two (2) times the sum of

 

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  Mr. Kirchner’s annual base salary as of March 23, 2020 and (b) two (2) times Mr. Kirchner’s target annual bonus (which bonus shall be prorated for the portion of the calendar year that has elapsed prior to the date of termination if such termination occurs more than 60 days prior to or more than 18 months following a change in control of Xperi).

For Messrs. Andersen, Davis, Dharan and Skaaden, this represents the double-trigger severance payable pursuant to the terms of the severance agreements and change in control severance agreements. Consists of a cash payment equivalent to (a) the named executive officer’s annual base salary as of March 23, 2020 and (b) the named executive officer’s target annual bonus for the calendar year in which termination occurs (which bonus shall be prorated for the portion of the calendar year that has elapsed prior to the date of termination).

 

(2)

For Mr. Kirchner only, the amount shown includes the value of double-trigger accelerated vesting of unvested Xperi RSUs and PSUs pursuant to the terms of the Kirchner employment agreement. This amount includes the value of all unvested Xperi RSUs and PSUs (measured at target) held by Mr. Kirchner as of May 29, 2020, calculated based on the assumed price per share of Xperi common stock of $11.46.

For Messrs. Andersen, Davis, Dharan and Skaaden, the amount shown includes the value of double-trigger accelerated vesting of unvested Xperi RSUs, PSUs and stock options pursuant to the terms of the severance agreements and change in control severance agreements. This amount includes the value of all unvested Xperi RSUs and PSUs (measured at target) held by the named executive officer as of May 29, 2020, calculated based on the assumed price per share of Xperi common stock of $11.46. This amount also includes the value of unvested Xperi stock options held by the named executive officer as of May 29, 2020, calculated based on the positive difference, if any, between $11.46 and the applicable exercise price.

 

(3)

For Mr. Kirchner only, this amount represents double-trigger benefits pursuant to the terms of the Kirchner employment agreement. Consists of estimated costs of employer-paid premiums and administrative fees to continue health benefits coverage for eighteen (18) months following the termination date under the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, which we refer to as COBRA (and similar state laws).

For Messrs. Andersen, Davis, Dharan and Skaaden, this amount represents double-trigger benefits pursuant to the terms of the severance agreements and change in control severance agreements. Consists of estimated costs of employer-paid premiums and administrative fees to continue health benefits coverage for twelve (12) months following the termination date under the applicable provisions of COBRA (and similar state laws).

Recommendation of the TiVo Board of Directors

At its meeting on December 18, 2019, the TiVo board approved the merger agreement and the consummation of the transactions contemplated by the merger agreement upon the terms and subject to the conditions set forth in the merger agreement, determined that the terms of the TiVo merger and the other transactions contemplated by the merger agreement are fair to, and in the best interests of, TiVo and its stockholders, directed that the merger agreement be submitted to TiVo stockholders for adoption, recommended that TiVo stockholders adopt the merger agreement and declared that the merger agreement is advisable. ACCORDINGLY, THE TIVO BOARD RECOMMENDS THAT TIVO STOCKHOLDERS VOTE “FOR” THE PROPOSAL TO ADOPT THE MERGER AGREEMENT, “FOR” THE PROPOSAL TO APPROVE THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES TO ADOPT THE MERGER AGREEMENT AND “FOR” THE PROPOSAL TO APPROVE, BY NON-BINDING ADVISORY VOTE, CERTAIN COMPENSATION ARRANGEMENTS FOR TIVO’S NAMED EXECUTIVE OFFICERS IN CONNECTION WITH THE MERGERS.

As described above under “—Background of the Mergers,” the TiVo board, in evaluating the mergers and the merger agreement, consulted with TiVo’s management and legal and financial advisors and, in reaching its decision at its meeting on December 18, 2019, to approve the merger agreement and the transactions

 

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contemplated thereby, considered a variety of factors weighing positively and negatively in connection with the mergers. In light of the number and wide variety of factors considered in connection with its evaluation of the transaction, the TiVo board did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its determination. The TiVo board viewed its position as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of TiVo’s reasons for the mergers and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Statement Regarding Forward-Looking Statements.”

TiVo’s Reasons for the Mergers

Strategic Considerations. The TiVo board considered that the mergers will likely provide a number of significant strategic opportunities, including the following:

 

   

the strategic and transformative nature of the transaction, which will combine TiVo’s and Xperi’s respective businesses to create a new company which will be one of the leading enterprises for consumer and entertainment technology and intellectual property, with expected combined annual cost synergies of $50 million to be recognized by year-end 2021 and significant joint revenue synergy opportunities in the automotive and Smart TV segments;

 

   

the fact that, because TiVo stockholders would hold approximately 53.5% of the HoldCo common stock upon completion of the mergers, TiVo stockholders would have the opportunity to participate in the future performance of the combined company;

 

   

the fact that the combined company would have a strong balance sheet with reduced leverage and the ability to invest in adding new technology, services and products for customers;

 

   

the fact that the combined company will reach hundreds of millions of consumers with its products and solutions in the home, auto and mobile markets, and that the combined company’s strategic revenue synergies will enable bundled solutions to address the convergence of media and technology in those markets and substantial revenue diversification given TiVo’s primary historical focus on the Pay TV market;

 

   

the fact that the combined company will have a more diverse intellectual property portfolio, and the strategic alignment of TiVo and Xperi in terms of their processes for identifying patentable innovations, prosecuting licensable patents, and maintaining intellectual property portfolios; and

 

   

TiVo’s view of the likelihood that the required regulatory approval would be obtained without a material adverse impact on the respective businesses of TiVo, Xperi or HoldCo.

Other Factors Considered by the TiVo Board. In addition to considering the strategic factors described above, the TiVo board considered the following additional factors, all of which it viewed as generally supporting its decision to approve the merger agreement:

 

   

the review and analysis of TiVo’s and Xperi’s businesses, historical financial performance and condition, operations, properties, assets, regulatory issues, competitive positions, prospects and management, including the results of the business, financial, accounting and legal due diligence investigations of Xperi;

 

   

the current and prospective economic and competitive environment facing the media and entertainment industry and TiVo;

 

   

the historical market prices, volatility and trading information with respect to TiVo common stock and Xperi common stock in connection with determining an exchange ratio that results in an acceptable level of ownership of HoldCo common stock for existing TiVo common stockholders;

 

   

the terms and conditions of the merger agreement, including (i) the limited nature and scope of the closing conditions, as well as the likelihood of satisfaction of these conditions, and (ii) the

 

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circumstances under which termination fees are payable by either TiVo or Xperi and the size of the termination fees, which are reasonable in light of the benefits of the mergers and commercial practice;

 

   

the oral opinion of LionTree rendered to the TiVo board on December 18, 2019, which was subsequently confirmed by delivery of a written opinion dated December 18, 2019, as to the fairness, from a financial point of view, as of such date, of the TiVo exchange ratio to the holders of TiVo’s common stock (other than Xperi and its affiliates), based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken and other matters considered by LionTree in preparing its opinion. The LionTree opinion is more fully described below under the section “—Opinion of TiVo’s Financial Advisor” beginning on page 84;

 

   

that the mergers would provide for significant opportunities for cost saving by eliminating duplicative activities, including consolidating corporate governance, reducing public company costs, reducing procurement expenses, reducing labor expenses and realizing cost synergies between the businesses of TiVo and Xperi, thereby driving meaningful and long-term stockholder value; and

 

   

the anticipation that the consideration to be received by TiVo stockholders in the TiVo merger in the form of shares of HoldCo common stock will be tax-free to TiVo stockholders for U.S. federal income tax purposes (see “Adoption of the Merger Agreement—Material U.S. Federal Income Tax Consequences of the Mergers”).

The TiVo board also considered the following potentially negative factors associated with the mergers:

 

   

the dilution associated with the shares that HoldCo would be required to issue under the mergers;

 

   

the risk that the mergers might not be consummated in a timely manner or that the closing of the mergers might not occur despite the companies’ efforts, including by reason of a failure to obtain the approval of either of the TiVo stockholders or the Xperi stockholders or the failure of the parties to obtain the applicable regulatory approval;

 

   

the potential length of the regulatory approval process and the period of time during which TiVo may be subject to the merger agreement;

 

   

the possibility that regulatory or governmental authorities might seek to impose conditions or divestitures on or otherwise prevent or delay the mergers, including the risk that they might seek an injunction in federal court and/or commence an administrative proceeding seeking to prevent the parties from completing the transaction;

 

   

the risks and costs to TiVo if the mergers are not completed in a timely manner, including the potential diversion of management and employee attention, potential employee attrition and the potential effect on business and customer relationships;

 

   

the risk that the potential benefits of the mergers may not be fully realized, recognizing the many potential management and regulatory challenges associated with successfully combining the businesses of TiVo and Xperi, including the potential for client losses and the possibility that anticipated cost savings from the mergers may not be realized;

 

   

the risk of diverting management focus and resources from other strategic opportunities and from operational matters, and potential disruption associated with the mergers and integrating the companies;

 

   

the risk that certain key employees of TiVo or Xperi might not choose to remain with the combined company;

 

   

the risk of having less influence on the management and policies of the combined company than they now have on the management and policies of TiVo as four (4) members of the seven (7)-member HoldCo board will be comprised of members of the Xperi board as of immediately prior to the effective time, including the current Xperi Chief Executive Officer, Mr. Kirchner, who will also serve as the Chief Executive Officer of HoldCo;

 

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the potential challenges and difficulties relating to integrating the operations of TiVo and Xperi;

 

   

the restrictions on the conduct of TiVo’s business prior to the completion of the mergers, requiring TiVo to conduct its business in the ordinary course, subject to specific limitations, which may delay or prevent TiVo from undertaking business opportunities that may arise pending completion of the mergers;

 

   

the limitations imposed in the merger agreement on the solicitation or consideration by TiVo of alternative business combinations;

 

   

the fact that TiVo may be required to pay Xperi, under certain circumstances, a termination fee if the merger agreement were to be terminated (see “Adoption of the Merger Agreement—The Merger Agreement—Termination of the Merger Agreement”);

 

   

the risk that the financing commitment letters obtained in connection with the execution of the merger agreement might go unfulfilled, forcing the combined company to seek alternative financing arrangements in connection with the mergers, potentially on terms less attractive than originally anticipated;

 

   

Xperi’s right to terminate the merger agreement to enter into a transaction representing a superior proposal;

 

   

that some officers and directors of TiVo have interests in the mergers that may be different from, in addition to or in conflict with the interests of TiVo stockholders (see below the section entitled “—Interests of Officers and Directors in the Mergers—Interests of TiVo Directors and Executive Officers in the Mergers”);

 

   

the fees and expenses associated with completing the transaction; and

 

   

various other risks associated with the mergers and the business of TiVo, Xperi and the combined company described under “Risk Factors.”

After considering the foregoing potentially positive and potentially negative factors, TiVo’s board concluded that the potential benefits of the merger agreement and the mergers outweighed the risks and other potentially negative factors associated with the merger agreement and the proposed mergers. The TiVo board realized that there can be no assurance about future results, including results considered or expected as disclosed in the foregoing reasons.

The foregoing discussion of the factors considered by the TiVo board is not intended to be exhaustive, but rather includes the principal factors considered by the TiVo board. The TiVo board conducted an overall review of the factors described above, including thorough discussions with TiVo’s management and outside legal and financial advisor.

In considering the recommendation of the TiVo board to approve the TiVo merger proposal, TiVo stockholders should be aware that TiVo’s directors may have interests in the mergers that are different from, or in addition to, those of TiVo stockholders generally. For additional information, see below the section entitled “—Interests of TiVo Directors and Executive Officers in the Mergers” beginning on page 97 of this joint proxy statement/prospectus.

Opinion of TiVo’s Financial Advisor

LionTree Advisors LLC

On December 18, 2019, at a meeting of the TiVo board, LionTree rendered an oral opinion to the TiVo board (which was subsequently confirmed in writing by delivery of LionTree’s written opinion dated December 18, 2019) as to the fairness, from a financial point of view, as of the date thereof, of the TiVo exchange ratio to the holders of TiVo common stock (other than Xperi and its affiliates), based upon and subject

 

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to the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by LionTree in preparing its opinion.

LionTree’s opinion was provided to the TiVo board and only addressed the fairness, from a financial point of view, of the TiVo exchange ratio to the holders of TiVo common stock (other than Xperi and its affiliates) (without giving effect to any impact of the Transaction on any particular stockholder of TiVo other than in its capacity as a holder of TiVo common stock). The summary of LionTree’s opinion in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is included as Annex C to this joint proxy statement/prospectus and incorporated herein by reference, and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by LionTree in preparing its opinion. However, neither LionTree’s opinion nor the summary of its opinion and the related analyses set forth in this joint proxy statement/prospectus constitute a recommendation to any stockholder as to how such stockholder should vote or act with respect to the Transaction or any other matter.

In arriving at its opinion, LionTree, among other things:

 

   

reviewed a draft, dated December 18, 2019, of the merger agreement;

 

   

reviewed certain publicly available business and financial information relating to Xperi and TiVo;

 

   

reviewed certain historical financial information and other data relating to TiVo that were provided to LionTree by the management of TiVo, approved for LionTree’s use by TiVo, and not publicly available;

 

   

reviewed certain historical financial information and other data relating to Xperi that were provided to LionTree by the management of Xperi, approved for LionTree’s use by TiVo, and not publicly available;

 

   

reviewed certain internal financial forecasts, estimates, and other data relating to the business and financial prospects of TiVo on a stand-alone basis, assuming completion of TiVo’s planned separation, that were provided to LionTree by the management of TiVo, approved for LionTree’s use by TiVo, and not publicly available, including financial forecasts and estimates for the fiscal years ending December 31, 2019, through December 31, 2022, prepared by the management of TiVo (“TiVo Forecasts”) (which forecasts are summarized in “Adoption of the Merger Agreement—Financial Forecasts—Certain TiVo Forecasts” beginning on page 112).

 

   

reviewed certain internal financial forecasts, estimates, and other data relating to the business and financial prospects of Xperi on a stand-alone basis that were provided to LionTree by the management of Xperi (which forecasts are summarized in “Adoption of the Merger Agreement—Financial Forecasts—Certain Xperi Forecasts” beginning on page 103), as adjusted by the management of TiVo and approved for LionTree’s use as so adjusted by TiVo, and not publicly available, including financial forecasts and estimates for the fiscal years ending December 31, 2019, through December 31, 2024, prepared by the management of Xperi, as adjusted by the management of TiVo and approved for LionTree’s use as so adjusted by TiVo;

 

   

reviewed certain estimates of certain potential cost savings, revenue enhancements and other synergies and dis-synergies (collectively, the “Synergies”), in each case, for the fiscal years ending December 31, 2020, through December 31, 2024, prepared by the management of TiVo, including based on discussions with Xperi management, and approved for LionTree’s use by TiVo;

 

   

conducted discussions with members of the senior management of TiVo and Xperi concerning the business, operations, historical financial results, and financial prospects of TiVo, Xperi and the Transaction;

 

   

reviewed current and historical market prices of the TiVo common stock and the Xperi common stock;

 

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reviewed certain publicly available financial and stock market data with respect to certain other companies;

 

   

reviewed certain financial performance data of TiVo and Xperi and compared that data with similar data for certain other companies;

 

   

reviewed certain publicly available research analyst reports;