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24 February 2014

RFMD and TriQuint to merge, creating $2bn-turnover firm

RF Micro Devices Inc of Greensboro, NC, USA and RF front-end component maker and foundry services provider TriQuint Semiconductor Inc of Hillsboro, OR, USA have announced a definitive merger agreement to combine in an all-stock transaction. The new company will have a new name and shared leadership team. The boards of directors of both firms have unanimously approved the transaction.

The merger combines complementary product portfolios - featuring power amplifiers (PAs), power management integrated circuits (PMICs), antenna control solutions, switch-based products and premium filters - and leverages these to deliver what is claimed to be the industry’s most comprehensive portfolio of high-performance mobile solutions. It is also reckoned that it will strengthen the combined firms’ service to the infrastructure and defense/aerospace industries and enable gallium nitride (GaN) solutions for additional markets and applications.

The merger is expected to create new growth opportunities in three large global markets - mobile devices, network infrastructure and aerospace/defense - with scale advantages, innovative new products and a greatly improved operating model. RFMD and TriQuint reckon that, together, they will offer the industry's broadest portfolio of critical enabling technologies to develop and commercialize tightly integrated solutions. The combination is also expected to foster a new wave of mobile devices that are broadly accessible and offer dramatically higher data throughput. The merger also creates a supplier in infrastructure & defense with about $500m in annual revenue, with a portfolio of products and foundry services supporting applications including radar, next-generation base-stations, optical communications, and the Internet of Things.

TriQuint’s total revenue in Q4/2013 was $267.7m, and full-year 2013 revenue was $892.9m. RFMD’s December-quarter revenue was $288.5m, while its revenue for full calendar 2013 was $1.17bn.

TriQuint shareholders will receive 1.675 shares of the new firm and RFMD shareholders will receive 1 share of the new firm for each TriQuint or RFMD share held. At the closing of the transaction, the companies will execute a one-for-four reverse stock split, resulting in about 145 million shares outstanding. Former shareholders of RFMD and TriQuint will each own about 50% of the new firm post-merger. The transaction represents an implied price of $9.73 for each TriQuint share, representing a 5.4% premium based on the closing price of $9.23 for TriQuint on 21 February.

The new firm will have a shared leadership team. TriQuint’s CEO Ralph Quinsey will serve as non-executive chairman, and RFMD’s CEO & president Bob Bruggeworth will serve as chief executive officer. The board of directors will comprise ten directors (five from the existing board of each company). Eight of the ten directors will be independent. TriQuint’s chief financial officer Steve Buhaly will be CFO and RFMD’s CFO Dean Priddy will be executive VP of administration, reporting to the CEO and responsible for integration and synergy value creation. Additional senior leaders of the combined firm will include RFMD’s Eric Creviston as president of Mobile Products, TriQuint’s James Klein as president of Infrastructure and Defense Products, TriQuint’s Steven Grant as corporate VP for Fab Technology & Manufacturing and RFMD’s Jim Stilson as corporate VP for Assembly/Test Technology & Manufacturing. Other leaders will be named later this year.

“The world’s demand for mobile data is growing exponentially,” notes Bruggeworth. “The combination of TriQuint and RFMD creates a new leader in RF solutions with expertise in mobile devices and complex infrastructure and global defense applications. With this merger of equals, we will bring under one roof all of the critical RF building blocks necessary to innovate at the heart of what makes mobile mobile - the crucial back-and-forth data flow between the mobile device and the network. We will harness this innovation for the benefit of all our customers - from mobile to infrastructure to defense,” he adds.

“Through this combination of RFMD and TriQuint, we form a diversified market leader with a highly compatible combination of products and technologies and a world-class team focused on innovation and superior financial results,” believes Quinsey. “The alignment of culture between the two companies and the well matched products, capabilities and technologies will create compelling new opportunities.”

The merger is expected to achieve at least $150m in cost synergies ($75m in annualized synergies exiting the first year after closing and an additional $75m exiting the second year). The transaction is expected to be accretive to non-GAAP earnings per share (EPS) in the first full fiscal year following the closing of the transaction.

The merger is expected to close in second-half 2014, subject to approval by the shareholders of both firms, the receipt of regulatory approvals, and other customary closing conditions.

See related items:

RFMD’s revenue hit by weakening at two largest customers

TriQuint grows 7% in Q4, led by 21% rebound in Networks infrastructure

Tags: RFMD TriQuint

Visit: www.triquint.com

Visit: www.rfmd.com

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