Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On October 29, 2020, Inphi Corporation (“Inphi”), entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Marvell Technology Group Ltd., a Bermuda exempted company (“Marvell”), Maui HoldCo, Inc., a Delaware corporation and a wholly-owned subsidiary of Marvell (“HoldCo”), Maui Acquisition Company Ltd, a Bermuda exempted company and a wholly-owned subsidiary of HoldCo (“Bermuda Merger Sub”) and Indigo Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of HoldCo (“Delaware Merger Sub”), pursuant to which, subject to the terms and conditions of the Merger Agreement, Bermuda Merger Sub will merge with and into Marvell, with Marvell surviving the merger as a wholly-owned subsidiary of HoldCo (the “Bermuda Merger”), followed immediately by the merger of Delaware Merger Sub with and into Inphi, with Inphi surviving the merger as a wholly-owned subsidiary of HoldCo (the “Delaware Merger” and, together with the Bermuda Merger, the “Mergers”). The board of directors of Inphi, Marvell, HoldCo, Bermuda Merger Sub and Delaware Merger Sub, respectively, have unanimously approved the Merger Agreement and the Mergers, as applicable.
Pursuant to the Merger Agreement, and upon the terms and subject to the conditions described therein, (i) at the effective time of the Bermuda Merger, all issued and outstanding common shares of Marvell (other than shares held by Marvell in Marvell’s treasury or held by HoldCo, Bermuda Merger Sub or any other subsidiary of Marvell) will be automatically converted into the right to receive one share of common stock of HoldCo (“HoldCo Common Stock”) and (ii) at the effective time of the Delaware Merger, all outstanding shares of common stock of Inphi (other than (i) shares held by Inphi (or held in Inphi’s treasury) or held by Marvell, Delaware Merger Sub or any other subsidiary of Marvell or held, directly or indirectly, by any subsidiary of Inphi or (ii) shares with respect to which appraisal rights are properly exercised and not withdrawn under Delaware law) will be automatically converted into the right to receive 2.323 shares of HoldCo Common Stock and $66 in cash, without interest, plus cash in lieu of any fractional shares of HoldCo Common Stock.
The Merger Agreement contains customary representations and warranties of Marvell and Inphi relating to their respective businesses and public filings, in each case generally subject to a materiality and “Material Adverse Effect” qualifiers. Additionally, the Merger Agreement provides for customary pre-closing covenants of Inphi, including a covenant to conduct its business in the ordinary course in all material respects and in accordance with past practice and to refrain from taking certain actions without Marvell’s consent. Both Inphi and Marvell have agreed not to solicit proposals, provide information to third parties, or enter into discussions, in each case, relating to specified alternative transaction proposals, or recommend or enter into agreements relating to certain specified alternative transactions, subject, in each case, to certain exceptions that would permit each party to consider and recommend certain superior proposals if the failure to do so would be inconsistent with their respective boards of directors’ fiduciary duties, or to terminate the Merger Agreement to accept certain superior proposals if the failure to do so would be inconsistent with the board of directors’ fiduciary duties.
Consummation of the Mergers is subject to various conditions, including, among others, (a) adoption of the Merger Agreement by Inphi’s stockholders; (b) the approval of the Bermuda Merger by Marvell’s shareholders; (c) the effectiveness of a registration statement on Form S-4 to be filed with the Securities and Exchange Commission (“SEC”) by HoldCo in connection with the issuance of HoldCo Common Stock in the Mergers; (d) the approval of the listing of HoldCo Common Stock on The Nasdaq Stock Market LLC; and (e) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and certain other regulatory clearances. The obligation of each party to consummate the Mergers is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions), the other party having performed in all material respects its covenants and obligations under the Merger Agreement and the absence of a “Material Adverse Effect” on the other party (as defined in the Merger Agreement).
The Merger Agreement also provides the parties with rights to terminate the Merger Agreement in certain circumstances, including if the Mergers have not been consummated by June 29, 2021 (which may be extended up to March 1, 2022 in order to satisfy certain regulatory closing conditions), if either party fails to obtain the necessary approvals for the Mergers from its stockholders, or if there is an order permanently restraining, enjoining, or otherwise prohibiting either Merger.
If the Merger Agreement is terminated under certain circumstances, an alternative acquisition proposal had previously been made with respect to Inphi, and within 12 months of the termination of the Merger Agreement, Inphi enters into a definitive agreement for certain extraordinary corporate transactions or completes any such transaction, Inphi would be obligated to pay Marvell a fee equal to $300 million. Inphi would also be obligated to pay this fee if the Merger Agreement is terminated because of certain triggering events by Inphi, including Inphi’s board of directors changing or withdrawing its recommendation regarding the Mergers, or failing to reaffirm its’ support for the Mergers in certain circumstances. Additionally, Inphi would be obligated to pay this fee if it elects to terminate the Merger Agreement to enter into certain superior acquisition transactions.
If the Merger Agreement is terminated because of certain triggering events by Marvell, including Marvell’s board of directors changing or withdrawing its recommendation regarding the Mergers, or failing to reaffirm its support for the Mergers in certain circumstances, Marvell would be obligated to pay Inphi a fee equal to $400 million. Marvell would also be obligated to pay this fee if it elects to terminate the Merger Agreement to enter into certain superior acquisition transactions. Additionally, if the Merger Agreement is terminated due to failure to receive certain regulatory approvals or because of the existence of certain government orders or litigations, Marvell would be obligated to pay Inphi a fee equal to $460 million.
If the Merger Agreement is terminated due to the failure to obtain Inphi’s stockholder approval or Marvell’s shareholder approval, the party whose stockholders did not approve the transaction will be obligated to reimburse the other party for its fees, costs and other expenses related to the Merger Agreement (including legal fees, financial advisory fees, and consultant fees), up to a maximum of $25.0 million.
In connection with the Mergers, Marvell delivered to Inphi a copy of (i) an executed 364-day bridge facility commitment letter, dated as of October 29, 2020, among Marvell, Holdco and JPMorgan Chase Bank, N.A. (“JPMorgan”) and (ii) an executed facilities commitment letter, dated as of October 29, 2020, among Marvell, Holdco and JPMorgan, pursuant to which JPMorgan has committed, subject to customary conditions, to lend initially to Marvell and on and after the closing date of the Mergers, HoldCo, up to $4,000,000,000 of bridge and term loans for the purpose of funding the Mergers on the closing date (the “Debt Financing”). Marvell’s obligations pursuant to the Merger Agreement are not conditioned on Marvell obtaining the Debt Financing.
The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
The Merger Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the parties. In particular, the assertions embodied in the representations and warranties contained in the Merger Agreement are qualified by information in confidential disclosure schedules provided by each party in connection with the signing of the Merger Agreement. These confidential disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were used for the purpose of allocating risk between the parties rather than establishing matters as facts. Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in parties’ public disclosures. Accordingly, you should not rely on the representations and warranties in the Merger Agreement as characterizations of the actual state of facts about the parties.