Acquisition creates platform for addressing
connectivity applications for Industrial and Automotive markets
Key Transaction Highlights:
- Enables entry into automotive and
industrial low-power connectivity market with combined strengths of
the two companies
- Combination of ON Semiconductor’s
expertise in power management & Bluetooth technologies with
Quantenna’s Wi-Fi & software capabilities
- Immediately accretive to non-GAAP
earnings per share and free cash flow
ON Semiconductor Corporation (Nasdaq: ON) (“ON Semiconductor”)
and Quantenna Communications, Inc. (Nasdaq: QTNA) (“Quantenna”)
today announced that they have entered into a definitive agreement
for ON Semiconductor to acquire Quantenna for $24.50 per share in
an all cash transaction. The acquisition consideration represents
equity value of approximately $1.07 billion and enterprise value of
approximately $936 million, after accounting for Quantenna’s net
cash of approximately $136 million at the end of fourth quarter of
2018. The acquisition significantly enhances ON Semiconductor’s
connectivity portfolio with the addition of Quantenna’s industry
leading Wi-Fi technology and software capabilities.
“We are very pleased to welcome Quantenna to ON Semiconductor’s
team. The acquisition of Quantenna is another step towards
strengthening our presence in industrial and automotive markets.
The combination of ON’s expertise in highly efficient power
management and broad sales and distribution reach, and Quantenna’s
industry leading Wi-Fi technologies and software expertise creates
a formidable platform for addressing fast growing markets for
low-power connectivity in industrial and automotive applications,”
said Keith Jackson, president and chief executive officer of ON
Semiconductor. “I am very excited about the opportunity this
acquisition creates for customers, shareholders, and employees of
the two companies.”
“Today’s announcement is great news for Quantenna employees and
customers worldwide. As part of ON Semiconductor, Quantenna
will benefit from a world-class organization in our commitment to
providing the best end user experience for our customers,” stated
Dr. Sam Heidari, chairman and chief executive officer of
Quantenna. “We are proud of our accomplishments and look
forward to a smooth transition with the ON Semiconductor team to
pursue exciting new opportunities for Quantenna’s talented
employees and reinforce our longstanding position as a leading
Wi-Fi technology innovator.”
Following consummation, the transaction is expected to be
immediately accretive to ON Semiconductor’s non-GAAP earnings per
share and free cash flow, excluding any non-recurring acquisition
related charges, the fair value step-up inventory amortization, and
amortization of acquired intangibles.
The transaction is not subject to a financing condition. ON
Semiconductor intends to fund the transaction through cash on hand
and available capacity under its existing revolving credit
facility.
Completion of the transaction is subject to approval by
Quantenna’s stockholders, regulatory approvals and other customary
closing conditions. The transaction has been approved by ON
Semiconductor’s and Quantenna’s boards of directors and is expected
to close in the second half of 2019. No approval of the
stockholders of ON Semiconductor is required in connection with the
proposed transaction.
Morrison & Foerster LLP served as legal advisor to ON
Semiconductor. Qatalyst Partners acted as exclusive financial
advisor to Quantenna, along with O’Melveny & Myers LLP, who
served as legal advisor.
Teleconference
ON Semiconductor will host a conference call for the financial
community at 5:00 p.m. Eastern Daylight Time (EDT), on March 27,
2019, to discuss this announcement. ON Semiconductor will also
provide a real-time audio webcast of the teleconference on the
Investors page of its website at http://www.onsemi.com. The webcast
replay will be available at this site approximately one hour
following the live broadcast and will continue to be available for
approximately one year following the conference call. Investors and
interested parties can also access the conference call through a
telephone call by dialing (877) 356-3762 (U.S./Canada) or (262)
558-6155 (International). In order to join this conference call,
you will be required to provide the Conference ID Number - which is
7271535.
About ON Semiconductor
ON Semiconductor (Nasdaq: ON) is driving energy efficient
innovations, empowering customers to reduce global energy use. The
Company is a leading supplier of semiconductor-based solutions,
offering a comprehensive portfolio of energy efficient power
management, analog, sensors, logic, timing, connectivity, discrete,
SoC and custom devices. The Company’s products help engineers solve
their unique design challenges in automotive, communications,
computing, consumer, industrial, medical, aerospace and defense
applications. ON Semiconductor operates a responsive, reliable,
world-class supply chain and quality program, a robust compliance
and ethics program and a network of manufacturing facilities, sales
offices and design centers in key markets throughout North America,
Europe and the Asia Pacific regions. For more information, visit
www.onsemi.com.
ON Semiconductor and the ON Semiconductor logo are registered
trademarks of Semiconductor Components Industries, LLC. All other
brand and product names appearing in this document are registered
trademarks or trademarks of their respective holders. Although the
Company references its website in this news release, information on
the website is not to be incorporated herein.
About Quantenna Communications
Quantenna (Nasdaq: QTNA) is the global leader and innovator of
high performance Wi-Fi solutions. Founded in 2006, Quantenna has
demonstrated its leadership in Wi-Fi technologies with many
industry firsts. Quantenna continues to innovate with the mission
to perfect Wi-Fi by establishing benchmarks for speed, range,
efficiency and reliability. Quantenna takes a multidimensional
approach, from silicon and system to software, and provides total
Wi-Fi solutions. For more information, visit www.quantenna.com.
Cautions regarding Forward-Looking Statements
This document contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, but are not limited to:
statements related to the consummation and benefits of the
acquisition by ON Semiconductor Corporation (“ON Semiconductor”) of
Quantenna Communications, Inc. (“Quantenna”) for customers,
shareholders, and employees of the two companies, including
creating a formidable platform for addressing fast growing markets
for low-power connectivity in industrial and automotive
applications; ON Semiconductor strengthening its presence in
industrial and automotive markets; and the expectation of a smooth
transition of Quantenna with ON Semiconductor and the acquisition
reinforcing Quantenna’s longstanding position as a leading Wi-Fi
technology innovator. These forward-looking statements are based on
information available to each of ON Semiconductor and Quantenna of
the date of this release and current expectations, forecasts and
assumptions and involve a number of risks and uncertainties that
could cause actual results to differ materially from those
anticipated by these forward-looking statements. Such risks and
uncertainties include a variety of factors, some of which are
beyond our control. In particular, such risks and uncertainties
include, but are not limited to: the risk that one or more closing
conditions to the transaction may not be satisfied or waived, on a
timely basis or otherwise; the risk that the transaction does not
close when anticipated, or at all, including the risk that the
requisite regulatory approvals may not be obtained; matters arising
in connection with the parties’ efforts to comply with and satisfy
applicable regulatory approvals and closing conditions relating to
the transaction; there may be a material adverse change of ON
Semiconductor or Quantenna, or our respective businesses may suffer
as a result of uncertainty surrounding the transaction; the
transaction may involve unexpected costs, liabilities or delays;
difficulties encountered in integrating Quantenna, including the
potentially accretive and synergistic benefits; difficulties
leveraging desired growth opportunities and markets; the
possibility that expected benefits and cost savings may not
materialize as expected; our revenue and operating performance;
economic conditions and markets (including current financial
conditions); risks related to our ability to meet our assumptions
regarding outlook for revenue and gross margin as a percentage of
revenue; effects of exchange rate fluctuations; the cyclical nature
of the semiconductor industry; changes in demand for our products;
changes in inventories at our customers and distributors;
technological and product development risks; enforcement and
protection of our intellectual property rights and related risks;
risks related to the security of our information systems and
secured network; availability of raw materials, electricity, gas,
water and other supply chain uncertainties; our ability to
effectively shift production to other facilities when required in
order to maintain supply continuity for our customers; variable
demand and the aggressive pricing environment for semiconductor
products; our ability to successfully manufacture in increasing
volumes on a cost-effective basis and with acceptable quality for
our current products; risks associated with other acquisitions and
dispositions, including our ability to realize the anticipated
benefits of our acquisitions and dispositions; risks that
acquisitions or dispositions may disrupt our current plans and
operations, the risk of unexpected costs, charges or expenses
resulting from acquisitions or dispositions and difficulties
arising from integrating and consolidating acquired businesses, our
timely filing of financial information with the SEC for acquired
businesses and our ability to accurately predict the future
financial performance of acquired businesses; competitor actions,
including the adverse impact of competitor product announcements;
pricing and gross profit pressures; loss of key customers or
distributors; order cancellations or reduced bookings; changes in
manufacturing yields; control of costs and expenses and realization
of cost savings and synergies from restructurings; significant
litigation; risks associated with decisions to expend cash reserves
for various uses in accordance with our capital allocation policy
such as debt prepayment, stock repurchases or acquisitions rather
than to retain such cash for future needs; risks associated with
our substantial leverage and restrictive covenants in our debt
agreements that may be in place from time to time; risks associated
with our worldwide operations, including changes in trade policies,
foreign employment and labor matters associated with unions and
collective bargaining arrangements, as well as man-made and/or
natural disasters affecting our operations or financial results;
the threat or occurrence of international armed conflict and
terrorist activities both in the United States and internationally;
risks of changes in U.S. or international tax rates or legislation,
including the impact of the recent U.S. tax legislation; risks and
costs associated with increased and new regulation of corporate
governance and disclosure standards; risks related to new legal
requirements; and risks involving environmental or other
governmental regulation. Information concerning additional factors
that could cause results to differ materially from those projected
in the forward-looking statements is contained in ON
Semiconductor’s Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K and other of ON
Semiconductor’s filings with the Securities and Exchange
Commission. These forward-looking statements are as of the date
hereof and should not be relied upon as representing our views as
of any subsequent date, and we do not undertake any obligation to
update forward-looking statements to reflect events or
circumstances after the date they were made, except as may be
required by law. For additional information, visit ON
Semiconductor’s corporate website, www.onsemi.com, or for official filings visit the
SEC website, www.sec.gov.
Important Additional Information and Where to Find It
In connection with the proposed transaction, Quantenna will file
with the SEC and mail or otherwise provide to its stockholders a
proxy statement regarding the proposed transaction. BEFORE MAKING
ANY VOTING DECISION, QUANTENNA’S STOCKHOLDERS ARE URGED TO
CAREFULLY READ THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES
AVAILABLE AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION
WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE THEREIN
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. Investors
and security holders may obtain a free copy of the proxy statement
and other documents that Quantenna files with the SEC (when
available) from the SEC’s website at www.sec.gov and Quantenna’s
website at http://ir.quantenna.com/investor-overview. In addition,
the proxy statement and other documents filed by Quantenna with the
SEC (when available) may be obtained from Quantenna free of charge
by directing a request to Vernon Essi, Jr., Investor Relations,
Quantenna Communications, Inc., 1704 Automation Parkway, San Jose,
California 95131, Phone: (669) 209-5647. Media inquiries can be
directed to Vernon Essi, Jr. at vessi@quantenna.com, Phone: (669)
209-5647.
Certain Participants in the Solicitation
Quantenna, its directors and certain of its executive officers
and employees may be deemed, under SEC rules, to be participants in
the solicitation of proxies from Quantenna stockholders with
respect to stockholder approval of the proposed acquisition of
Quantenna. Information regarding the names of Quantenna’s directors
and executive officers and their respective interests in Quantenna
by security holdings or otherwise is set forth in Quantenna’s
Annual Report on Form 10-K for the fiscal year ended December 30,
2018 filed with the SEC on March 1, 2019, Quantenna’s definitive
proxy statement for its 2018 Annual Meeting of Shareholders filed
with the SEC on April 25, 2018 and Quantenna’s Current Reports on
Form 8-K dated June 8, 2018 and August 31, 2018. To the extent
holdings of such participants in Quantenna’s securities are not
reported, or have changed since the amounts described in the proxy
statement for the 2018 Annual Meeting of Shareholders, such changes
have been reflected on Initial Statements of Beneficial Ownership
on Form 3 or Statements of Change in Ownership on Form 4 filed with
the SEC. Additional information regarding the interests of such
individuals in the proposed transaction will be included in the
proxy statement relating to such acquisition when it is filed with
the SEC. These documents may be obtained free of charge from the
SEC’s website at www.sec.gov and Quantenna’s website at
http://ir.quantenna.com/investor-overview.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190327005791/en/
Kris PugsleyCorporate Media CommunicationsON
Semiconductor(312) 909-0661kris.pugsley@onsemi.com
Parag AgarwalVice President - Investor Relations &
Corporate DevelopmentON Semiconductor(602)
244-3437parag.agarwal@onsemi.com
Vernon Essi, Jr.Director of Investor Relations and
Strategic FinanceQuantenna Communications, Inc.(669)
209-5647vessi@quantenna.com
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