Item 2.01 |
Completion of Acquisition or Disposition of Assets. |
On November 29, 2023, SMART Global Holdings, Inc., a Cayman Islands exempted company (“SGH”), completed its previously announced divestiture of SMART Modular Technologies do Brasil – Indústria e Comercio de Componentes Ltda., a sociedade limitada governed by the laws of Brazil (“SMART Brazil”) pursuant to the terms of that certain Stock Purchase Agreement (the “Purchase Agreement”), by and among SMART Modular Technologies (LX) S.à r.l., a société à responsabilité limitée governed by the laws of Grand Duchy of Luxembourg and a wholly owned subsidiary of SGH (“Seller”), Lexar Europe B.V., a company organized under the laws of The Netherlands (“Purchaser”), Shenzhen Longsys Electronics Co., Ltd., a company limited by shares governed by the laws of the People’s Republic of China (“Longsys”), solely with respect to certain provisions therein, Shanghai Intelligent Memory Semiconductor Co., Ltd., a limited liability company governed by the laws of the People’s Republic of China, and, solely with respect to certain provisions therein, SGH.
Pursuant to the Purchase Agreement, Seller sold to Purchaser, and Purchaser purchased from Seller, 81% of Seller’s right, title and interest in and to the outstanding quotas of SMART Brazil, with Seller retaining a 19% interest in SMART Brazil (the “Retained Interest”) (the “Divestiture”).
At the closing of the Divestiture (the “Closing”), Purchaser paid to Seller (based on a total enterprise value of $205 million for SMART Brazil) an upfront cash purchase price of approximately $140 million, which amount reflects certain customary adjustments and estimated withholding tax due in connection with the Closing as set forth in the Purchase Agreement. In addition, pursuant to the Purchase Agreement, SGH has a right to receive, and Purchaser will be obligated to pay a deferred cash purchase price of approximately $28 million eighteen months following the Closing, subject to certain conditions. Further, subject to and at the time of exercise of the Put/Call Option (as defined below), Purchaser shall pay to Seller an additional cash payment equal to 19% of the amount of SMART Brazil’s cash at Closing (as calculated pursuant to the Purchase Agreement) minus the amount of SMART Brazil’s indebtedness at the Closing (as calculated pursuant to the Purchase Agreement).
Pursuant to the Purchase Agreement, at the Closing, SMART Brazil, Seller, Purchaser and Longsys entered into a Quotaholders Agreement, which provides Seller with a put option to sell the Retained Interest in SMART Brazil to the Purchaser (the “Put Option”) during three exercise windows following its fiscal years ending December 31, 2026, December 31, 2027 or December 31, 2028 (the “Exercise Windows”), with such Exercise Windows beginning on June 15, 2027 and ending on July 15, 2027, beginning on June 15, 2028 and ending on July 15, 2028 and beginning on June 15, 2029 and ending on July 15, 2029, respectively. A call option has also been granted to Purchaser to require Seller to sell the Retained Interest to the Purchaser during the Exercise Windows (together with the Put Option, the “Put/Call Option”). The price for the Put/Call Option is based on a 100% enterprise value of 7.5x net income for SMART Brazil for the preceding fiscal year at the time of exercise. The Quotaholders Agreement also provides, among other things, for certain governance and approval rights among the parties thereto.
The foregoing description of the Purchase Agreement, the Divestiture and the other transactions contemplated by the Purchase Agreement does not purport to be complete and is qualified in its entirety by the full text of the Purchase Agreement, which was filed as Exhibit 2.1 to SGH’s Current Report on Form 8-K filed with the SEC on June 13, 2023, and is incorporated herein by reference.
Item 7.01 |
Regulation FD Disclosure. |
On November 30, 2023, SGH issued a press release announcing the completion of the Divestiture, a copy of which is attached as Exhibit 99.1 and is incorporated herein by reference.