UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule
14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed
by the Registrant
x
Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive Proxy Statement
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x
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Definitive Additional Materials
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Soliciting Material Pursuant to §
240.14a-12
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MICROSEMI CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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x
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No fee required.
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¨
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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¨
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Fee paid previously with preliminary materials.
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¨
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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INFORMATION TO BE INCLUDED IN THE REPORT
As previously disclosed, on March 1, 2018, Microsemi Corporation,
a Delaware corporation (the “Company”), 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.
On April 19, 2018, the Company filed a definitive proxy statement (the “Proxy
Statement”) in connection with the vote of its stockholders to consider and approve the Merger Agreement.
As previously disclosed,
on April 20, 2018, stockholder Michael Rubin filed a putative class action complaint in the United States District Court for the
Central District of California, Rubin v. Microsemi et al, Case No. 8:18-cv-00653. On April 24, 2018, stockholder Robert Johnson
filed a separate putative class action complaint in the United States District Court for the Central District of California, Johnson
v. Microsemi et al, Case No. 8:18-cv-00698. On April 26, 2018, stockholder Jordan Rosenblatt filed a separate putative class action
complaint in the United States District Court for the Central District of California, Rosenblatt v. Microsemi et al, Case No. 8:18-cv-00724.
Each of the complaints alleges violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 in connection with
the Proxy Statement, seeks to enjoin the vote on and closing of the Merger and seeks rescission, damages, and attorneys’
and experts’ fees and costs. Additional lawsuits arising out of or relating to the Merger Agreement or the Merger may be
filed in the future.
While it is too early to
predict the outcome of this litigation, the Company believes that the claims asserted in the Rubin, Johnson and Rosenblatt complaints
are without merit and no supplemental disclosure is required under applicable law. However, in order to avoid the risk of adverse
effect or delay in connection with the Merger and to minimize the costs, risks and uncertainties inherent in litigation, and without
admitting any liability or wrongdoing, the Company determined to further voluntarily supplement the Proxy Statement through this
Current Report on Form 8-K. Nothing in this Current Report on Form 8-K shall be deemed an admission of the legal necessity or materiality
under applicable laws of any of the disclosures set forth herein. To the contrary, the Company specifically denies all allegations
in the Rubin, Johnson and Rosenblatt complaints that any additional disclosure was or is required.
The disclosure in the Proxy Statement under
the heading “The Merger – Background of the Merger” is hereby amended and supplemented by replacing the third
paragraph on page 36 of the Proxy Statement with the following paragraph:
Over the next few days, management
communicated to Microchip that the Board supported the Retention Arrangements and its reasons for doing so. On February 15, 2018,
Mr. Sanghi sent a letter to Mr. Peterson objecting to certain aspects of the Retention Arrangements and proposing certain alternatives.
Over the next few days, Mr. Sanghi and Mr. Peterson continued to discuss the Retention Arrangements and representatives of J.P.
Morgan and a member of the Board discussed the Retention Arrangements. On February 20, 2018, Mr. Sanghi sent a letter to Mr. Peterson
in which he continued to object to certain aspects of the Retention Arrangements and proposed certain alternatives, including reducing
the merger consideration if Microsemi determined to implement the Retention Arrangements.
At no time during the negotiation
of Merger Agreement did any executive officer of Microsemi have any discussions or negotiations with Microchip regarding post-closing
employment arrangements with the combined company.
The disclosure in the Proxy Statement under
the heading “The Merger – Certain Company Forecasts” is hereby amended and supplemented by replacing the fourth
paragraph of that section with the following paragraph:
The management projections
have been prepared by, and are the responsibility of, Microsemi’s management for internal use by Microsemi and Qatalyst Partners,
and approved by the Board, and were (i) provided to Qatalyst Partners for use in the financial analyses undertaken by Qatalyst
Partners in connection with rendering its opinion to the Board, (ii) not prepared for purposes of public disclosure, and (iii)
not prepared on a basis designed to comply with published guidelines established by the American Institute of Certified Public
Accountants for preparation and presentation of prospective financial data, published guidelines of the SEC (including those regarding
forward-looking statements and the use of non-GAAP measures) or GAAP. PricewaterhouseCoopers LLP, Microsemi’s independent
registered public accounting firm, has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect
to the management projections contained in this proxy statement and, accordingly, PricewaterhouseCoopers LLP does not express an
opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report incorporated by reference in
this proxy statement relates to Microsemi’s previously issued financial statements. It does not extend to management projections
and should not be read to do so. Further, the management projections include non-GAAP financial measures. No reconciliation of
such non-GAAP financial measures with comparable GAAP financial measures was prepared in connection with the preparation of the
management projections due to the difficulty of forecasting the timing or amount of certain items that have been excluded from
such non-GAAP financial measures, and a reconciliation to the comparable GAAP financial measures has not been provided because
certain factors that are materially significant to Microsemi's ability to estimate the excluded items are not accessible or estimable
on a forward-looking basis without unreasonable effort. Non-GAAP financial measures are not prepared in accordance with GAAP and
should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance
with GAAP.
The disclosure in the Proxy Statement under
the heading “The Merger – Certain Company Forecasts” is hereby amended and supplemented by replacing the last
table in that section and the introductory language related to that table with the following disclosure:
The following is a summary of the projected unlevered free cash
flow, which is derived from the January 2018 management projections summarized in the table above:
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Fiscal Year
(3)
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(in millions, except per share amounts)
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Q2-Q4’
FY2018
(4)
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FY2019
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FY2020
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FY2021
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FY2022
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FY2023
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Non-GAAP Operating Income
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$
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496
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$
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746
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$
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834
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$
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926
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$
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1,011
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$
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1,085
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Less Cash Taxes
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(22
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(24
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(20
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(51
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(99
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(152
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Less Capital Expenditures
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(55
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(68
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(69
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(71
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)
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(72
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(72
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Plus Depreciation
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39
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57
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61
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65
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69
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72
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Less Investment in Working Capital
(1)
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6
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(90
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(93
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(70
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(56
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(22
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Unlevered Free Cash Flow
(2)
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$
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465
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$
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622
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$
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713
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$
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799
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$
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852
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$
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911
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(1)
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“
Investment in Working Capital
” is a non-GAAP financial measure calculated as the net change in current
assets less current liabilities over the period, excluding any cash and cash equivalents, current debt balances, tax-related assets
or liabilities, and any impact to assets or liabilities from acquisitions or divestitures.
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(2)
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“
Unlevered Free Cash Flow
” is a non-GAAP financial measure calculated by starting with Non-GAAP Operating
Income (as shown in the table above) and subtracting cash taxes paid, capital expenditures and investment in working capital and
then adding back depreciation expense.
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(3)
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Microsemi’s fiscal year end is the Sunday nearest September 30 (e.g., fiscal year 2018 will end on September 30, 2018).
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(4)
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Unlevered Free Cash Flow for the Q2-Q4’FY2018 period is based on the three fiscal quarters ending on September 30, 2018.
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The disclosure in the Proxy Statement under the heading “The
Merger – Opinion of Financial Advisor – Discounted Cash Flow Analysis” is hereby amended and supplemented by
replacing the last two bullet points in that section with the following bullet point:
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·
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dividing the resulting amount by the sum of (A) number of diluted
shares of Microsemi common stock outstanding (calculated using the treasury stock method), taking into account outstanding PSUs
(based on the midpoint between target and maximum allowable for each of the applicable performance periods), stock options, RSUs,
stock appreciation rights and shares of Microsemi common stock held in treasury in connection with the potential exchange or retraction
(i.e. redemption at the option of the holder of the Special Shares), as of February 27, 2018, as provided by Microsemi’s
management (such number of diluted shares, Microsemi’s “Diluted Share Count”) plus (B) the product of the Diluted
Share Count multiplied by a dilution factor of approximately 9.7%, as projected by Microsemi’s management, to reflect the
dilution to the Microsemi stockholders over the projection period due to the effect of future issuances by Microsemi of equity
awards.
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Additional Information and Where to Find It
In connection with the proposed
acquisition, the Company has filed a proxy statement and other related documents with the SEC. INVESTORS AND STOCKHOLDERS
ARE ADVISED TO READ THESE DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and stockholders may obtain a free
copy of these documents and other documents filed by the Company at the SEC's web site at
www.sec.gov
and
at the Investor section of the Company’s website at
https://investor.microsemi.com/
.
Participants in the Solicitation
The Company, Microchip and their directors and executive officers
may be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the Merger.
Information regarding certain interests of these directors and executive officers in the transaction that are different from the
interests of the Company’s stockholders generally is included in the definitive proxy statement described above. Additional
information regarding the directors and executive officers of the Company is also included in the Company’s proxy statement
for its 2018 Annual Meeting of Stockholders, which was filed with the SEC on December 20, 2017. Additional information regarding
the directors and executive officers of Microchip is also included in Microchip’s proxy statement for its 2017 Annual Meeting
of Stockholders, which was filed with the SEC on July 13, 2017. These documents are available free of charge at the SEC’s
web site at www.sec.gov.
Forward Looking Statements
This filing contains forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, those relating
to projected financial measures and the anticipated closing of the Merger. These forward-looking statements are subject to a number
of business, economic, legal and other risks and uncertainties that are inherently difficult to predict, including, but not limited
to; general economic, political or industry conditions, especially in the semi-conductor industry; inability to develop new technologies
and products to satisfy changes in customer demand or the development by our competitors of products that decrease the demand for
the Company's products; unfavorable or declining conditions in end markets; inability of the Company’s compound semiconductor
products to compete successfully with silicon-based products; production delays related to new compound semiconductors; variability
of the Company’s manufacturing yields; potential effects of system outages or data security breaches; inability by the Company
difficulties foreseeing future demand; rises in inventory levels and inventory obsolescence; environmental or other regulatory
matters or litigation, or any matters involving contingent liabilities or other claims; the possibility that the Company may be
unable to obtain the required stockholder approval or antitrust regulatory approvals with respect to the Merger or that other conditions
to closing the Merger may not be satisfied, such that the closing of the Merger may be delayed or not occur at all; the reaction
of customers, suppliers, distributors and other business relationships of the Company to the Merger; the transactions contemplated
by the Merger Agreement may involve unexpected costs, liabilities or delays; risks that the pendency of the Merger disrupts current
plans and operations of the Company; the amount of the costs, fees, expenses and charges related to the Merger Agreement; the outcome
of any currently pending or future legal proceedings involving the Company, Microchip or the Merger; the occurrence of any event,
change or other circumstances that could give rise to the termination of the Merger Agreement. For an additional discussion of
these and other risk factors, please refer to the documents that the Company files with the SEC, including those on Forms 10-K,
10-Q and 8-K. All forward-looking statements speak only as of the date of this written communication or, in the case of any document
incorporated by reference, the date of that document. The Company is under no duty to update any of the forward-looking statements
after the date of this filing to conform to actual results or otherwise.
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