Magnachip and Wise Road Capital Announce Withdrawal of CFIUS Deposit and Mutual Termination of Merger Agreement

– Magnachip adopts a limited-term shareholder rights plan

Seoul, South Korea, December 13, 2021 / PRNewswire / – Magnachip Semiconductor Corporation (“Magnachip Corp.” or the “Company”) (NYSE: MX), United States (Delaware) parent company of Magnachip Semiconductor, Ltd., and South Dearborn Limited, a company incorporated in the Cayman Islands, and Michigan Merger Sub, Inc., a Delaware company, which are investment vehicles established by Wise Road Capital LTD and certain of its limited partners (“Wise Road”), today announced that they have received the approval of the Committee on Foreign Investment in United States (“CFIUS”) to withdraw their joint filing with CFIUS regarding their proposed transaction (the “Merger”) and will terminate their definitive merger agreement announced previously.

(PRNewsfoto / Magnachip Semiconductor)

This course of action resulted from the inability of the parties, despite months of effort, to secure CFIUS approval for the Merger. In connection with the termination of the merger agreement, South Dearborn will pay the Company a termination fee of $ 70.2 million, of which $ 51 million will be paid promptly and $ 19.2 million will be deferred until March, 31st, 2022. In connection with the termination of the Merger Agreement, the parties will release each other from all obligations regarding the proposed Merger Transaction as well as from any claims arising out of or relating to the Merger Agreement.

The Company also intends to request Magnachip Semiconductor, Ltd., the Company’s Korean operating subsidiary, to withdraw its application regarding the Merger which had been submitted to the Korean Ministry of Commerce, Industry and Energy. under article 11-2 of the Prevention Law. industrial technology disclosure and protection.

“While we are disappointed with the termination of our merger agreement, we are confident that Magnachip remains well positioned to create value for our shareholders as an independent public company,” said YJ Kim, CEO of Magnachip. “This result has no impact on the strong long-term fundamentals of our business and our ability to accelerate our MX 3.0 strategy. In fact, over the past eight months, our team has continued to advance our 2020 plans. -2023 previously announced for sustainable and profitable growth We will share more details on the progress of the plan during a call that will be scheduled for January 6, 2022. I would like to thank our customers for their continued trust and the employees of Magnachip for their commitment to providing cutting edge products. “

Magnachip’s Board of Directors (the “Board”) is actively engaged in determining how best to return and enhance shareholder value. Accordingly, in order to allow sufficient time to assess all options, the Board has adopted a Limited Time Shareholder Rights Plan (the “Rights Plan”) and declared a distribution of one Right (“Right”). for each common share outstanding. The Rights Plan comes into effect immediately and will expire on December 12, 2022, unless they are refunded, exchanged or modified previously. The registration date for the distribution of the Rights is 23 December 2021. The Rights will generally only be exercisable if a person or group acquires 12.5% ​​(or 20% in the case of a passive institutional investor) or more of the outstanding ordinary shares of the Company (the “trigger percentage” ). If a person or group acquires the outstanding ordinary shares of the Company for an amount greater than the trigger percentage, each Right will authorize its holder (other than the acquirer (s)) to purchase for $ 80, a number of common shares of the Company having a market value of twice this price. Alternatively, in the event that the Rights become exercisable, the Board may choose to exchange one ordinary share of the Company for each outstanding Right (other than the Rights held by the acquirer (s)). In addition, if the Company is acquired as part of a merger or other business combination transaction after a person or group has acquired 12.5% ​​(or 20% in the case of a passive institutional investor) or more of the outstanding ordinary shares of the Company, the Rights would entitle shareholders of the Company, other than the purchaser, to purchase for each ordinary share held, $ 80 value of the other party’s common stock having a market value of twice that price.

The Rights Plan is designed to enable all shareholders to realize the long-term value of their investment in the Company and was enacted to protect all shareholders from opportunistic efforts to gain control of the Company, without remunerating in any way. appropriate to the shareholders of the Company, following the termination of the Merger while the Board assesses the future options for the Company. The rights plan was not adopted in response to a particular effort to gain control of the Company. The plan does not, however, prevent the board from considering or accepting an offer to acquire the company if it considers such action to be fair, desirable and in the best interests of the shareholders of the company as a whole. .

A copy of the Rights Plan and a summary of its terms will be filed on Form 8-K with the Securities and Exchange Commission.

In addition, in view of the termination of the Merger, the Company will hold a 2022 Annual Meeting, details of which will be communicated as soon as possible.

Advisers
JP Morgan Securities LLC acted as exclusive financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP, Richards, Layton & Finger, PA and Kim & Chang acted as legal advisers to Magnachip.

About Magnachip Semiconductor Corporation

Magnachip is a designer and manufacturer of analog and mixed-signal semiconductor platform solutions for communications, IoT, consumer, industrial and automotive applications. The company supplies a wide range of standard products to customers all over the world. Magnachip, with over 40 years of operating history, has a portfolio of approximately 1,200 registered patents and pending applications, and has extensive expertise in engineering, design and manufacturing processes. For more information, please visit www.magnachip.com. Information on or accessible through Magnachip’s website does not form part of this press release and is not part of it.

About Wise Road Capital

Wise Road Capital is a global private equity firm that invests in leading technology companies. The company is focused on identifying opportunities in enabling technologies for global urbanization and smart and green life through close cooperation with companies on several key themes, including smart city, smart manufacturing and renewable energy. . Wise Road Capital strives to build a healthy international ecosystem around these key themes through its investments and its international management team which combines sector and investment expertise.

Forward-looking statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which are subject to the safe harbor thus created. Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. These forward-looking statements are often, but not always, formulated using words or expressions such as “may”, “will”, “will”, “anticipate”, “estimate”, “plan”, “plan” , “” continue “,” in progress “,” expect “,” believe (s) “,” intend “,” predict “,” potential “,” future “,” strategy “,” opportunity “and similar words or phrases or the negatives of such words or phrases. Forward-looking statements involve inherent risks and uncertainties, and significant factors could cause actual results to differ materially from those anticipated, including, but without limitation: legal proceedings, judgments or settlements, including those which may be brought against the Company, the boards of directors and senior executives and others following the announcement of the closing of the transaction ; disruptions to plans and ongoing operations caused by termination of the transaction pr opposite; potential difficulties in retaining employees due to the termination of the transaction; the response of customers, suppliers, business partners and regulators to the termination of the transaction; and other risks and uncertainties and factors identified under “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and updated in subsequent reports filed by the Company with the SEC. These reports are available at www.magnachip.com or www.sec.gov. Forward-looking statements speak only as of the date on which they are made, and the Company does not undertake to update them in light of new information or future events.

Cision

Cision

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SOURCE Magnachip Semiconductor Corporation


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