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Pending Acquisition
6 Months Ended
Apr. 01, 2018
Business Combinations [Abstract]  
Pending Acquisition
Pending Acquisition

On March 1, 2018, Microsemi, Microchip Technology Incorporated, a Delaware corporation ("Microchip") and Maple Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Microchip ("Merger Subsidiary"), entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which, among other things, Merger Subsidiary will be merged with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly owned subsidiary of Microchip. At the time the Merger becomes effective (the "Effective Time"), each outstanding share of common stock, par value $0.20 per share, of the Company ("Company Stock") outstanding immediately prior to the Merger (other than (1) treasury stock held by the Company or shares of Company Stock held by Microchip or any subsidiary of the Company or Microchip, which will be cancelled without consideration and (2) shares of Company Stock held by stockholders, if any, who properly exercise their appraisal rights under the General Corporation Law of the State of Delaware) will be automatically cancelled and converted into the right to receive an amount equal to $68.78 in cash, without interest (the "Merger Consideration").
Pursuant to the Merger Agreement, as of the Effective Time, the outstanding Company equity awards will be treated as follows: (a) each outstanding option to purchase shares of Company Stock and stock appreciation right ("SAR") related to Company Stock, whether vested or unvested, will be assumed by Microchip and will be subject to the same terms and conditions as applied to the related option or SAR immediately prior to the Effective Time, except that (i) the number of shares of Microchip’s common stock subject to each assumed option or assumed SAR will be equal to the product of the number of shares of Company Stock underlying such assumed option or assumed SAR as of immediately prior to the Effective Time multiplied by the ratio of the Merger Consideration to the average closing sales price per share of Microchip’s common stock over the period of ten trading days ending on the last trading day before the closing of the Merger (the "equity award exchange ratio") and (ii) the per share exercise price of each assumed option or assumed SAR will be determined by dividing the per share exercise price of the assumed option or assumed SAR immediately prior to the Effective Time by the equity award exchange ratio; (b) each award of time-based vesting restricted stock units ("RSU") with respect to shares of Company Stock that is outstanding and vested immediately prior to the Effective Time (including those RSUs that become vested by their terms immediately prior to or as of the Effective Time) will be canceled and converted into the right to receive an amount in cash equal to (i) the number of vested RSUs subject to the award multiplied by (ii) the Merger Consideration; (c) each award of time-based vesting RSUs with respect to shares of Company Stock that is outstanding and unvested at the Effective Time will be assumed by Microchip and converted into a number of RSUs with respect to Microchip’s common stock determined by multiplying the number of unvested RSUs by the equity award exchange ratio; (d) each award of performance-based vesting RSUs with respect to shares of Company Stock ("PSUs") that is outstanding immediately prior to the Effective Time will vest as to a percentage of the total number of shares of Company Stock subject to such award to be determined prior to the Effective Time by the compensation committee of the Company’s board of directors (the "Board") (which percentage will not be less than 100% of the target number of shares subject to the award or greater than the maximum possible vesting percentage under the terms of the award) and will be canceled and converted into the right to receive an amount in cash equal to (i) the number of vested PSUs subject to the award multiplied by (ii) the Merger Consideration; and (e) each share of Company Stock awarded pursuant to a Company restricted stock award that is outstanding and unvested as of immediately prior to the Effective Time will be cancelled and converted into the right to receive an amount in cash equal to the Merger Consideration, provided that the right of the award holder to receive such cash payment will be subject to the same vesting conditions (including any applicable acceleration provisions provided under the terms of the award) as applied to the share of Company Stock to which such payment of the Merger Consideration relates. However, at least 10 days prior to the Effective Time, Microsemi and Microchip may agree that the Microsemi equity awards may be treated in a manner other than as set forth above if Microsemi and Microchip in good faith determine that (i) different treatment is necessary to avoid the violation of applicable local law or to comply with applicable local law, and (ii) such different treatment is, to the maximum extent practicable, consistent with the treatment set forth above.
The respective obligations of the Company, Microchip and Merger Subsidiary to consummate the Merger are subject to the satisfaction or waiver of certain customary conditions, including the adoption of the Merger Agreement by the Company’s stockholders, receipt of certain regulatory approvals, the absence of any legal prohibitions to the consummation of the Merger, the accuracy of the representations and warranties of the parties and compliance by the parties with their respective obligations under the Merger Agreement. Assuming timely receipt of required regulatory approvals and satisfaction of other closing conditions, including the adoption of the Merger Agreement by the Company’s stockholders, the Company and Microchip anticipate that the Merger will be completed in June 2018.
The Merger Agreement contains certain termination rights, including the right of the Company to terminate the Merger Agreement under specified circumstances to accept an unsolicited superior proposal from a third party. The Merger Agreement provides that, upon termination of the Merger Agreement by the Company or Microchip under specified circumstances (including termination by the Company to accept a superior proposal), a termination fee of $290.0 million will be payable by the Company to Microchip. The termination fee is also payable by the Company to Microchip under certain other specified circumstances set forth in the Merger Agreement. The Merger Agreement also contains a provision requiring the Company to reimburse Microchip for up to $35.0 million of its expenses incurred in connection with the Merger if the Merger Agreement is not adopted by the Company’s stockholders is not obtained at a meeting called for that purpose.
During the quarter ended April 1, 2018, we recorded acquisition-related costs of approximately $14.8 million, primarily for outside legal and external financial advisory fees associated with the pending acquisition by Microchip. These costs were recorded in sales, general and administrative expenses in our consolidated statements of operations. Additional acquisition-related costs are expected to be incurred through the closing of the Merger.