ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Agreement and Plan of Merger
On August 30, 2021, DSP Group, Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Synaptics Incorporated, a Delaware corporation (“Parent”), and Osprey Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (the “Merger Sub”). The Merger Agreement provides, subject to its terms and conditions, for the acquisition of the Company by Parent at a price of $22.00 per share of the Company’s common stock, $0.001 par value per share (each, a “Share”), in cash, without interest and subject to deduction for any required withholding tax (the “Merger Consideration”), through the merger of the Merger Sub with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Parent. The Company’s Board of Directors (the “Board”) has unanimously approved the Merger and the Merger Agreement and recommended that stockholders adopt the Merger Agreement, and the Company has agreed to hold a stockholders’ meeting to submit the Merger Agreement to its stockholders for their consideration.
Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”):
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each Share that is issued and outstanding immediately prior to the Effective Time (other than Shares held in the treasury of the Company, all of which will be canceled, and Shares held by holders who properly exercise their appraisal rights under Delaware law) will be automatically converted into the right to receive the Merger Consideration;
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each Company stock option that is outstanding, vested and unexercised immediately prior to the Effective Time will be canceled and converted into the right to receive in cash the excess, if any, of the Merger Consideration over the exercise price per share of such stock option; provided that, in the event that the exercise price of any such vested stock option is equal to or greater than the Merger Consideration, such stock option will be canceled, without any consideration being payable in respect thereof and have no further force or effect;
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each Company stock appreciation right (a “Company SAR”) that is outstanding, vested and unexercised immediately prior to the Effective Time will be canceled and converted into the right to receive in cash the excess, if any, of the Merger Consideration over the base appreciation price per share of such Company SAR; provided that, in the event that the base appreciation price of any such Company SAR is equal to or greater than the Merger Consideration, such Company SAR will be canceled, without any consideration being payable in respect thereof and have no further force or effect;
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each Company restricted stock unit (a “Company RSU”) that is outstanding and vested prior to the Effective Time and has not been settled immediately prior to the Effective Time will be canceled and converted into the right to receive in cash the Merger Consideration;
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each Company stock option, Company SAR and Company RSU that is outstanding and unvested immediately prior to the Effective Time will be canceled and replaced with a restricted stock unit for Parent common shares. In the case of Company stock options and Company SARs, the number of restricted stock units for Parent common shares will be determined by dividing the spread of the Company stock option or Company SAR by the Parent Stock Price (as defined in the Merger Agreement). In the case of Company RSUs, the number of restricted stock units for Parent common shares will be determined using an exchange ratio designed to preserve the intrinsic value of such Company RSU; and
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each Company performance stock unit that is outstanding and vested prior to the Effective Time and has not been settled immediately prior to the Effective Time will be canceled and converted into the right to receive the Merger Consideration.
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Pursuant to the Merger Agreement, the Company will take actions necessary with respect to the Company’s Amended and Restated 1993 Employee Stock Purchase Plan (the “ESPP”) to provide that, among other things, (i) any ongoing offering period under the ESPP will be terminated prior to the Effective Time, (ii) no new offering period under the ESPP will commence during the period between the date of the Merger Agreement and the Effective Time and (iii) the ESPP will terminate on the date immediately prior to the Effective Time.
The Merger Agreement contains customary representations and warranties from both the Company, on the one hand, and Parent and the Merger Sub, on the other hand. It also contains customary covenants, including covenants providing for each of the Company and Parent to use its reasonable best efforts to cause the Merger to be consummated, and covenants requiring the Company, among other things, (i) to use commercially reasonable efforts to conduct its business in the ordinary course in all material respects, substantially consistent with past practice, during the interim period between the execution of the Merger Agreement and the Effective Time, (ii) not to engage in specified types of transactions during such period and (iii) not to solicit proposals or engage in discussions relating to alternative acquisition proposals or change the recommendation of the Board to the Company’s stockholders regarding the Merger Agreement, in each case except as otherwise permitted by the Merger Agreement, including in connection with the compliance by the Board with its fiduciary duties under applicable law. In addition, the Company has agreed to file a proxy statement and cause a special stockholders meeting to be held regarding the adoption of the Merger Agreement, and, subject to certain customary exceptions, that the Board will unanimously recommend that the stockholders of the Company approve the adoption of the Merger Agreement and to not withdraw or modify that recommendation.
Completion of the Merger is subject to customary closing conditions, including (i) adoption of the Merger Agreement by the Company’s stockholders, and (ii) the absence of governmental injunctions or other legal restraints prohibiting the Merger. In addition, the obligation of each party to consummate the Merger is conditioned upon, among other things, the accuracy of the representations and warranties of the other party (subject to certain materiality exceptions), and material compliance by the other party with its covenants under the Merger Agreement. Parent’s obligation to consummate the Merger is also conditioned on the absence of a “Company Material Adverse Effect,” as defined in the Merger Agreement. Parent’s obligations under the Merger Agreement are not subject to any financing condition.
The Merger Agreement may be terminated, subject to the terms and conditions of the Merger Agreement: (i) by mutual written agreement of Parent and the Company, (ii) by either Parent or the Company, if a governmental injunction or other legal restraint in certain jurisdictions prevents the consummation of the Merger, (iii) by either Parent or the Company, if the requisite vote of the Company’s stockholders has not been obtained or (iv) by either Parent or the Company upon the other party’s uncured material breach of any representation, warranty, covenant or agreement under the Merger Agreement. The Merger Agreement may also be terminated by the Company to enter into an agreement with respect to a superior proposal, subject to specified conditions, and by Parent, if the Board changes its recommendation regarding the Merger, the Board’s recommendation is not included in the Company’s proxy statement for the Merger, or the Board fails to reaffirm its recommendation in response to an alternative acquisition proposal. In addition to the foregoing termination rights, and subject to certain limitations, either party may terminate the Merger Agreement if the Merger is not consummated by January 30, 2022.
If the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, the Company will be required to pay Parent a termination fee of $19,774,000 (including under specified circumstances in connection with the Company’s entry into an agreement with respect to a superior proposal).
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated herein by reference.
The Merger Agreement has been included to provide investors and stockholders with information regarding its terms. It is not intended to provide any other factual information about the Company, Parent, the Merger Sub or their respective subsidiaries and affiliates. The Merger Agreement contains representations and warranties by the Company, on the one hand, and Parent and the Merger Sub, on the other hand, made solely for the benefit of the other. The assertions embodied in those representations and warranties are subject to qualifications and limitations agreed to by the respective parties in negotiating the terms of the Merger Agreement, including information in confidential disclosure schedules delivered in connection with the signing of the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were made as of specified dates, may be subject to a contractual standard of materiality different from what might be viewed as material to investors, or may have been used for the purpose of allocating risk between the Company, on the one hand, and Parent and the Merger Sub, on the other hand, rather than establishing matters as facts. Accordingly, the representations and warranties in the Merger Agreement should not be relied on by any persons as characterizations of the actual state of facts about the Company, Parent, the Merger Sub or their respective subsidiaries or affiliates at the time they were made or otherwise. In addition, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.